Short-sea shipping appears ready for a rebound as the costs and delays of transport on America’s crowded highways continue skyward

By MATT HILBURN, Associate Editor

This month, the private freighter Westwood Pomona will ease out of a slip in British Columbia, Canada, and begin a journey to the port of Long Beach, Calif.

There is little that is remarkable about the Westwood Pomona, an 11,424-ton side loader, known in the shipping trade as a “sto-ro,” that was built in 1985 and previously owned by a Finnish carrier.

But it’s a voyage that many industry and government experts view as exemplary of a coming revitalization of a segment of the U.S. shipbuilding industry that has been moribund for decades. The trip is the first step by the Westwood Shipping Line, a subsidiary of forest products giant Weyerhaeuser Co., to create a new business in short-sea shipping by ferrying goods up and down the coast.

Westwood is an early entrant in what it sees as an emerging market.

“The I-5 corridor [between San Diego and Blaine, Wash.,] is terribly congested, and as international trade picked up over the last few years, it’s been increasingly difficult for some of the major railroads and trucking lines to be able to be as efficient as they once were,” said Guy Stephenson, acting president of Westwood Shipping.

There are signs that the nation’s bumper-to-bumper highways are forcing others to reassess the viability of the short-sea shipping business. The Commonwealth of Massachusetts is investing millions of dollars in its small- and medium-sized ports, partly to accommodate the demands of short-sea shipping that officials see on the horizon. A California transport company also plans a short-sea shipping service along the California coast.

Many in the trucking industry have become believers, and now view short-sea shipping as a bridge to new business rather than a direct competitor. Some military services use short-sea routes and special ships to move their fighting units and equipment at top speeds.

Highway congestion is not the only concern for those searching for new ways to get their goods to market. The rising cost of fuel is changing the pricing equation between short-sea shipping and other modes of transportation. Also, some experts maintain that greater use of shipping would reduce highway accidents and wear and tear on the nation’s roads.

Though in its infancy in this country, short-sea shipping holds such promise that the United States, Canada and Mexico signed a memorandum of cooperation in 2004 to promote short-sea shipping among the three countries.

The flow of commerce across the United States is growing fast. The volume of domestic commerce is expected to increase from 13.5 billion tons in 1998 to 22.5 billion tons in 2020, according to Department of Transportation (DOT) estimates. International trade will double during the next 20 years to more than 2 billion tons annually. All told, the nation’s transportation infrastructure will be expected to carry 70 percent more cargo in 2020, relative to 1998.

According to the DOT’s Maritime Administration, one barge could take up to 58 trucks off the highway and a 15-barge tow could eliminate the need for 870 trucks.

Many experts say shipping is the only mode of transport capable of absorbing the dramatic surge in commerce, and some of that increase will go to the short-sea shipping industry, which will provide new ways of moving goods over coastal waters among port cities in the Americas.

“Americans every day find themselves driving the national highways, and they find themselves in traffic behind a lot of trucks,” said John Jamian, acting maritime administrator of the Maritime Administration. “No one ever really stops and thinks about the possibility of that cargo moving on a different transportation mode.”

Those thoughts are echoed by Richard S. Armstrong, Massachusetts’ director of port development.

“Unless we find an alternative to the I-95 corridor situation that is strangling the Massachusetts economy, we’re going to be in real trouble down the road.” Interstate 95 stretches from Houlton, Maine, to Miami, and is notorious in many locales for its frequent traffic jams.

Short-sea shipping is not a new phenomenon. Northern Europe and Southeast Asia have well-developed systems of short-sea shipping that have proven reliable, efficient, cost-effective and environmentally friendly.

There are examples of successful ventures akin to short-sea shipping in the United States. The Great Lakes region boasts a vibrant shipping infrastructure, and rivers and inland waterways have long been used by barges carrying bulk cargo. There are even some tug barges that carry bulk cargo on blue water routes.

But the continuing stress on the nation’s highways — and railways — accompanied by increases in shipping times and costs, is prompting some companies to take a long look at short-sea shipping as an awakening industry.

Weyerhaeuser’s Westwood subsidiary already operates a fleet of seven ocean-going ships that work the international routes between North America and Asia. The Westwood Pomona is its first venture with short-sea shipping.

It will carry Weyerhaeuser products, and provide shipping services to other companies. Stephenson said the announcement of the new route is already generating a lot of interest, and that costs would be “very competitive” versus traditional overland shipping methods.

Westwood Pomona will make a round trip from British Columbia to Long Beach every 14 days.

Ron Silva, the chief executive officer of Westar Transport, a small California trucking company, is investigating the possibility of starting up a short-sea shipping business and has invested a considerable amount of his own money into researching the market. His goal is not to put his trucking operation out of business, but rather to “build the utmost efficient transportation system and use those ships to move them long distances, and make my trucking operation as efficient as possible.

“I really think we could actually pull close to half to 60-70 percent of the volume off the I-5 corridor,” he said. “And I’m pretty confident that the same numbers would apply to the East Coast.”

Silva said his start-up model — a mere six ships running between Southern and Northern California — could quickly capture 20 percent of the volume trucks carry.

The Marine Corps pumped new life into short-sea shipping with its Westpac Express catamaran that transports Marines and their equipment from Okinawa to training sites around Asia. The High-Speed Vessel (HSV) can carry 970 troops and 500 tons of roll-on/roll-off cargo in a single trip at a speed of 33 knots.

“The HSV is dollar saving and time saving,” said Westpac Express civilian captain George Baker, after taking Marines from Okinawa to Korea for an exercise in 2004. “Shipping 970 troops by air would probably take a week to get them from Okinawa to Iwakuni, and that is without any cargo. The 500 tons of cargo would have also taken longer, so you are looking at two weeks of planes and transportation to make the 22-hour mission we can do.”

Jamian, a maritime industry executive before joining the Maritime Administration, foresees the day when the military and short-sea shippers will recognize their shared interests and ask a shipyard to design a dual-use hull. That could lead to a higher construction volume in that shipyard and drive down costs, he said.

A robust short-sea shipping industry also could provide the military with greater flexibility for the movement of materiel.

U.S. Transportation Command (USTRANSCOM), the arm of the military responsible for moving military equipment and personnel around the globe, is keeping an eye on the commercial viability of this emerging industry.

“As the concept of operations develops and matures in industry, USTRANSCOM will remain interested in its potential impact to support [Department of Defense] movement requirements,” and command spokesman said.

The trucking industry no longer views short-sea shipping as a threat, said Curtis Whalen, executive director of the Intermodal Motor Carrier Conference of the American Trucking Associations Inc., in Alexandria, Va.

“There’s plenty of business out there,” he said. “What we’re seeing is that some of the short-sea projects are actually talking to the truckers to gain a better understanding of how things move and what might move better on a ship.”

He said trucking companies could very well participate on the equity of some short-sea shipping projects.

“The trucking industry, I think, has come absolutely full circle,” Armstrong said.

Citing a driver shortage, increased congestion on the highways and rising fuel costs, Armstrong said the trucking industry, rather than viewing short-sea shipping as a competitor, is now seeing it as a bridge to making more trips on a regional and local basis [150-mile radius from a port], which would allow drivers to come home at night.

“I predict that short-sea shipping services that are really going to be under way and well-funded and well-operated will be under the umbrella of some trucking company,” Armstrong said.

Though the business climate seems set for a short-sea shipping boom, there are many barriers to those entering the market.

Costs are a concern. Armstrong said one way to lower costs is to keep short-sea shipping away from the deepwater, international ports, which historically have very high labor costs. Smaller ports that are less deeply dredged and do not have the overhead and union contracts scaled toward international cargo.

These ports, he said, should be made to look more like a truck terminal “so it’s a quick roll-on, roll-off, get the trucks out of there. No warehousing, none of those kind of things, no complicated customs or fancy gates.”

Armstrong said that during the next four to five years, Massachusetts would be investing $35 million-$40 million to upgrade ports at New Bedford and Fall River, a small chunk of the $300 million the state is authorized to spend on maintaining and upgrading ports.

“Now is that totally for short sea? No,” he said. “There are other things going on, but it is a commitment to make these terminals available and efficient for what we believe is going to happen no matter what. There’s just no more room on the highways.”

Financing is also an issue. Short-sea ships could cost $25 million-$150 million, and raising that kind of capital is no easy feat.

According to Mark Yonge, managing member of the consulting firm Maritime Transport & Logistics  Advisors, Fort Lauderdale, Fla., Title XI loans, which provide small- and medium-sized ship owners with a federal guarantee of their commercial bank loans for the construction of commercial ships in the United States, are currently not readily available via the Maritime Administration.

The Harbor Maintenance Act is another factor discouraging short-sea shipping. Effectively, it means that a ship making stops at, for example, several East Coast ports, would be taxed at each port visited.

The problem, said U.S. Rep. Dave Weldon R-Fla., is that ships on short-sea routes are “subject to the Harbor Maintenance Tax each and every time” they stop as they service ports along the costs. This precludes many vessels “from going to many American ports in a sequential fashion,” he said in a release.

Weldon is sponsoring legislation that would eliminate the tax for short-route ships but not affect larger, ocean-going vessels.

Some advocates of short-sea shipping claim the Jones Act is an obstacle to success. The law requires that all vessels being used to transport cargo and passengers between ports in the United States be owned and manned by U.S. citizens and built at U.S. shipyards. However, few ships meet those criteria.

Armstrong doesn’t foresee any changes to the Jones Act, and thinks that short-sea shipping, once proven viable, will be a spark to American shipbuilding. However, he favors federal waivers to the Jones Act as a means to “get the services under way and tested” before shipping companies commit to the construction of new ships.

There are also technological hurdles to overcome. If short-sea shipping is to be viable, ship designers will have to develop more rapid means for loading and unloading ships, said Silva. Vacuum mooring systems, which allow a ship to moor quickly utilizing large vacuum pads resembling suction cups, would eliminate the need for lines and line handlers, increasing the speed at which a ship could dock, and get underway.

Silva would also like to see ships equipped with bow and stern thrusters, which allow ships to maneuver more easily while docking, reducing dependency on tugs for assistance.

“In that 400-mile market [along] California … we’ve got to have a very efficient operation,” he said.

Fast ships that can turn around quickly at ports are essential, Silva said.

Despite the barriers, Stephenson believes his company is on the leading edge of a surging industry.

“This is just the beginning for those of us who are in the shipping business on the West Coast,” he said. “And I would expect that West Coast shipping will continue to increase over the next five to 10 years. This will finally be regarded as an effective, environmentally sound and efficient way to move cargo between ports.”