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Talking Freight Transcript

An Update on America's Marine Highway Program

October 17, 2012

Presentation

Nicholas Kehoe

Good afternoon or good morning to those of you to the West. Welcome to the Talking Freight Seminar Series. My name is Nicholas Kehoe and I will moderate today's seminar. Today's topic is an Update on the America's Marine Highway Program.

Before I go any further, I do want to let those of you who are calling into the teleconference for the audio know that you need to mute your computer speakers or else you will be hearing your audio over the computer as well.

Today we'll have one presenter, Lauren Brand of the United States Maritime Administration.

Mrs. Brand is the Director for the Office of Marine Highway and Passenger Vessels for the Maritime Administration, a part of the US Department of Transportation. In this role, she is responsible for identifying and removing impediments to Marine Highway development, integrating marine highways into our nation's surface transportation system and expanding use of our navigable waterways by both freight and passengers. Until 2010, she was the South Atlantic Gateway Director for MARAD. The South Atlantic region includes South Carolina, Georgia, and Florida - with the exception of the Panhandle, Puerto Rico and the US Virgin Islands. Before joining MARAD in July 2008, Lauren was the Senior Director for Business Development at Port Canaveral, FL. For 13 years she was part of the management team that worked to change the port from a niche cargo port to one of the top cruise ports in the world.

Today's seminar will last 90 minutes, with 60 minutes allocated for the speaker, and the final 30 minutes for audience Question and Answer. If during the presentations you think of a question, you can type it into the chat area. Please make sure you send your question to "Everyone." Lauren will be unable to answer your questions during their presentations, but I will start off the question and answer session with the questions typed into the chat box. If we run out of time and are unable to address all questions we will attempt to get written responses from the Lauren to the unanswered questions.

The PowerPoint presentation used during the seminar is available for download from the file download box in the lower right corner of your screen. The presentation will also be available online within the next few weeks, along with a recording and a transcript. I will notify all attendees once these materials are posted online.

One final note: Talking Freight seminars are eligible for 1.5 certification maintenance credits for AICP members. In order to obtain credit for today's seminar, you must have logged in with your first and last name or if you are attending with a group of people you must type your first and last name into the chat box. I have included more detailed instructions in the file share box on how to obtain your credits after the seminar. Please also download the evaluation form from the file share box and submit this form to me after you have filled it out.

We're now going to go ahead and get started. Today's topic, for those of you who just joined us, is an Update on the America's Marine Highway Program. As a reminder, if you have questions during the presentation please type them into the chat box and they will be answered in the last 30 minutes of the seminar. Our first presenter will be Lauren Brand of the United State Maritime Administration.

Lauren Brand

Thank you very much, Nicholas. Hello, and welcome to the world of Marine Highways. I will do a brief overview of the program for those who are not familiar with it today. We will go into some of the reasons that are making this program more relevant than it was even when it was first established in 2007. We'll talk about what has been happening the last few years and talk about some dollars that are being relayed to the program. I think everyone is interested in that. We will talk about service development along the waterways, some future ideas and then the focus for the programs for fiscal year 2013.

If I'm not addressing anything during the session, please feel free to bring it up in the question and answer. If I don't have an answer available for you immediately, we will get a written answer to you this week, I promise you that.

For those who are not familiar with the Maritime Administration, we are part of USDOT, and our mission is a really cool one. It is our job to improve and strengthen the transportation marine system, including infrastructure, industry and labor to meet the economic and security needs of the nation. A lot of people think that MARAD only addresses security items, but that is not the case. The Marine Highway program is one of the emerging business lines of the administration. And, we take it very seriously and the Secretary of Transportation has stated that the Marine Highway program is one of his priorities for the Maritime Administration.

So, what is going on? I don't think it's any secret, but it is interesting to see these four points on the same slide. We have got some shifting trade patterns, and the shift is due not only to business, but technology. The vessels have started to get bigger. The very first container ship was 56 TEU back around the 1950s. Now, the container ships are 15,000 TEU. I know that when I started in the seaport industry in 1993, the average vessel that called our port was 300 feet long. And, when I left that port four years ago, the average vessel was between 650 and 700 feet long. That meant that our infrastructure was inadequate to meet the needs of the vessels.

The infrastructure for seaports in our country was developed- much of it goes back to the 1930s, or some of it down in the South goes even later than that- but, the majority of the infrastructure in the country dates back to the 1950s, 60s and 70s. When it was built, it had an expected life cycle of about 50 years. And, it has exceeded that. So, there are some infrastructure needs that are needed in order to meet the requirements for the growing trade. Panama Canal is doing an expansion and that is no secret. There is additional capacity needed on the US transportation system as a whole. Capacity is needed on the road and rail, and we are fortunate with our geography that our water adds capacity that parallels many of our highly congested routes.

Manufacturing and distribution centers are shifting. They have been highway centric because we have such a fabulous highway network in the country, but now we are seeing those modal shifts changing to intermodal hubs. A prime example of that is the new million plus square foot distribution facility built near the Houston area. They put that down there specifically because of the water, road and rail that comes together down there.

Freight volume- this is a blown up version of the highway volume map that we all know and love. But, these freight volumes are growing and it really sets the scene. I like this map because it shows the red of the highway, but it also shows the blue of the waterways and how the water parallels and can relieve some of the highway congestion going forward.

A lot of people say that there is perception that water is unreliable, or that water is too slow. Well, you are right. It is not the same as a truck. But, John Vickerman, a well-respected consultant in the transportation industry, surveyed the top 1,000 multinational shippers and asked them what their priorities were. Transit time and speed was only 12% of their top priority. They wanted a competitive freight rates, they wanted a reliable schedule on consistency and service, and water does have reliability and consistency.

One of the last game changers that has been happening is MAP-21. You all should be familiar with MAP-21 by now. It is a 27 month program and we believe at MARAD that it is going to be laying the baseline for the future treatment of our transportation system for freight and passengers. It identifies the primary or national freight network, which is 27,000 miles of highway, and establishes the State Freight Advisory Committee. What does that have to do with water? We will talk about that in a few minutes.

So, the Marine Highway program. What is it? We are a congressionally legislated program. We were established in 2007 by the Energy Independence and Security Act, and basically, that act says that for the very first time navigable waters are an extension of the surface transportation system. So, think back to MAP-21, which says that we need 27,000 miles that can be identified as the primary freight network. But, the freight that is handled on that network, a large portion of it, starts or ends at the seaports, which are the extension of the surface transportation system.

If you look at the freight network map that we have that has been used now for almost 5 years, not all of those highways connect to all of those ports. A prime section of ports that are missing are the Great Lakes. Look at the map and look at Duluth, which generates a significant amount of tonnage. Duluth supports one of the last US steelmaking plants and does not even have any highways connecting to it on that map. So, we need to work together to make sure that our freight highway system connects to the ports that the freight is flowing to, so that we can have that intermodal connectivity.

The purpose of the Marine Highway program, as legislated, is to mitigate landside congestion. And, we are to encourage the use of short sea or Marine Highway transportation through development and expansion of designated corridors, similar to the highway corridors, but for waterways. We use documented vessels and services, which means US flagged vessels. And, we have to encourage shipper utilization of the program. If the market is not establishing a program on its own, there is reason for that. There are policy disincentives to using marine highways, we are discovering. The system is not made right now to make water very easy. We are lacking purpose-built vessels to carry the freight on the water on the routes that we are identifying. So, we are working hard on all of these things to make sure that we can support the shipper needs going forward.

We support port-landside infrastructure needs and we look to see where the gaps are in our system. And, we work with state and local governments to develop marine transportation strategies that will incorporate use of marine highways as part of a logical, intermodal plan. Use the water when it makes sense, when it is the best option, but, really consider all of the options available. Right now, we don't believe that maritime is always considered as one of the viable options.

So, in August of 2010, the secretary of transportation designated 18 corridors, connectors and crossings around the country. And, you know, this was fine and we put this map out. And, we really did not have a lot of interest in corridors or activity in corridor designation since August 2010. But, since the implementation of MAP-21, our office has seen a remarkable interest now in designation of corridors that were not considered in the past. For example, the upper Mississippi from Peoria, Illinois northward is a navigable waterway for part of it, but it has not been designated as a marine corridor. But, we have learned that a number of states are working together and will be submitting a corridor application.

We have exactly 3 corridor applications now in our office and they are just starting to be processed and we are expecting up to six more to be coming in in the near future. These are mostly coming in from the state DOTs, who are looking at their transportation system, seeing that they have waterways that are navigable and part of a designated corridor system and are submitting applications.

We have just improved our website, which is www.marad.dot.gov, and there is a Marine Highway link there, and there are FAQs, and it tells you how to apply for corridor designation and reach one of our field offices for assistance.

What are the objectives of these routes? Well, the objective of designating routes is to make sure that, as I said before, they are extensions of the surface transportation system. We look to help them get incorporated to state and regional transportation planning. The state of Virginia is a prime example. They have taken their marine highway designated route on the James River, called the M-64, because it parallels I-64, and if you look at the Virginia State transportation system map, they have the marine highway corridor highlighted on it, along with all of the other infrastructure. Landside facilities and infrastructure are to be developed to support short sea services. For those not familiar, short sea services are those that are coastal or inland in nature, and do not cross a large ocean, like the Atlantic or Pacific.

And then, we are working very hard with state agencies and with the office of the secretary to develop performance measures that can be consistent and accepted by the industry that will address short sea transportation growth.

Also, as part of legislation, we are to designate projects. And, those are designated by the secretary. The project has to be on a designated marine highway corridor, it has to have public sponsorship. The project is to create new, or expand or enhance existing services. And, these would be marine highway services as part of a total logistics plan.

The project application has to include a business plan, market plan and a financial plan. It has to show indications of market support that could be in terms of support letters, interviews, and a web link that shows a meeting where people were indicating support; there are all different ways to demonstrate market support. It has to involve documented vessels. Again, meaning US flagged vessels. And, our program only addresses containerized or trailerized freight or movement of passengers. Bulk freight uses the water. They don't need a federal program to help enhance that. But railroad traffic is underutilizing the water capacity. So, that is really what we focus on.

When we focus on passengers, we look at things that are in what we call the gap from the Federal Highway Ferry Program. The Federal Highway Ferry Program, to our understanding, focuses on larger volume movement of passengers and vehicles and services that are publicly operated, or where the service pricing structure is controlled or established or set by a public entity.

There is a gap where private operators cannot participant in the federal highway program, or brand-new services really don't get a new chance to work with the federal highway ferry program. So, we try to fill the gap or we work in concert with federal highway ferry very often. We don't duplicate efforts at all.

So, some people ask, what is critical? What do you need to develop a marine highway service? You can't just go out and get a boat and start doing something. We found, in order to be successful, you need about five basic elements. You need communication between multiple partners, including public and private. And, when we work with projects, we encourage the establishment of a multijurisdictional management committee for the project where you will have the port authorities on either end, terminal operators on the other end of the service, the vessel operator, or a tug and barge operator, and MARAD. And, we work together and have regular meetings, or, it could be regular phone calls where we track the progress and talk about problems that come up and issues. And, we see how the expertise of the team can help this new service grow. This is a very difficult time in our economy and it is difficult for services to start up.

So, communication, we have found, has been the number one thing that we need for a service to really start up. Promotion efforts have to be coordinated between all partners. We found that when one partner tries to do all of the marketing, it is just not enough. You really need layered marketing that has to be coordinated so that the message is consistent with the shipping community.

They do need solid, business market finance plans. A hope and a dream never worked in any business, and it certainly does not work with this one. Adequate capital is needed. You know, it is not good enough to be able to afford the infrastructure, afford the vessel. You have to be able to put the fuel in the vessel and pay the payroll until the revenue starts coming in from the service. So, they need adequate capital.

They need to be located on a designated Marine Highway corridor, and that is pretty logical. But, we found some people from services that are not on designated corridors, and we are unable to assist them.

I have brought a couple of examples of some services. This one is a success. It is the M-64 Express Marine Hwy. service that started in 2008. They are generating about 450 TEUs a month, and actually it may be up a little bit from that by now. You can see that the red is the highway, it shows the miles. The blue is the water route. And, the service extends between the port of Norfolk and the Port of Richmond, Virginia. The service, on October 2, went to three times a week. So, while it was slow starting at once a week, they found that the service frequency was not enough for a lot of shippers. Once they were able to build enough volume very slowly they went into two times a week, now it has been just one year and they have been able to increase it to three times a week.

We are hoping that before the end of calendar 2013, we will be ordering a second barge, and then the service will be much more frequent. The greater the frequency, the more customers we are attracting. And, this is a great example of public private partnership. The MPO in Richmond, led by Barbara Nelson, has been outstanding in terms of championing this service and this program and working together with the partners of the Port Authority and the vessel operator. They are working together and communicating the benefits of the service. The public benefits are being tracked. It not only reduces congestion from I-64, but also helps with their emission reduction and reduces petroleum usage. There are a lot of pluses to these services.

To give you a feel for federal support of the Marine Highway concept, between the Federal Highway Ferry Program, the TIGER grant programs from 2009 until 2012, and then we actually had grant funds appropriated for the Marine Highway program in 2010. All of those dollars are adding up to just under $180 million that will help start or expand Marine Highway services around the country.

So, every single item here, or I should say every single project listed on this slide, shows you how much money they have received, and shows you where in the country they are. And, if anyone has specific questions about these, there are one page descriptors on the Internet for many of them. Just give me a call or an e-mail, and I will point you to where those are.

This is an example of a Tiger grant. The M-64 project that I showed in the previous slide was a Marine Highway grant and this one is a Tiger grant. This is commonly called the Green Trade Corridor service and it has two different sections to it. Phase 1 is starting from Stockton to Oakland, California. Here in red is the highway and the water is shown in blue. This Stockton to Oakland service has all of the equipment in place for now. They have all of the landside equipment in place, they have two barges, the two barges have been outfitted and they're ready to go. Labor has trained loading freight on and off in Stockton. And, all they have to do is finish a few more agreements in Oakland and the service will be able to start in October.

The Port of Stockton has actually attracted three new tenants to the port since this service was proposed to start. All three tenants are heavyweight agricultural product processors that will be putting containerized freight for export in a container service from Stockton, sailing it on the barge to Oakland, and then it goes right to the berth where the larger ships move the freight in and out of to load for export to the Far East. So, the very first customer on this will be a company called Capital Sea and they are proposing to generate 300 truckloads a week that are actually coming off of Route I-580, a significantly congested corridor in California.

One thing I think is really interesting about this product is that matching the $30 million grant fund was state funds, local funds, but also had funds from two different air quality management districts in California. And, that was pretty significant. For them to say yes, this Marine Highway service will positively impact the air quality of the area. And, they wanted to invest funds in getting this service going.

The program office is looking at states because we wanted to pull together a list of contacts at each state that was on a marine highway. And, when we started looking at state websites to say, okay, who should we be contacting in each state, we were really surprised to find that of 36 states with designated marine highways within their areas of responsibility, only six of them had a department that is actually entitled maritime, port, waterway or marine department. So then, we made a guess of who we should be contacting in the other states and, we found that, you can see the numbers here, of state that have a planning department, six of them we thought would be the intermodal department, five of them the freight department and so on.

And then, we found six states actually have, again, designated Marine highways. They have no departments that address maritime or fit into one of the categories listed above that line. If a state does not have a Maritime coordinator, that is a phrase that we have coined, that can help them to address system issues, how to plan and integrate water into the intermodal system of the state, then, we think that the state possibly does not have the right expertise at the table. Or, maybe we are just not aware of who to contact.

So, we are really reaching out and trying to find who would be the Maritime coordinator for each of the state DOTs.

Florida has an intermodal department and they have a sea port manager. There are very active in Florida in incorporating water into the state transportation infrastructure, especially for the movement of freight. And in early August, we were lucky enough, not lucky enough, but privileged enough to have a meeting in Jacksonville. And, the Jacksonville chamber organized a multijurisdictional meeting of public and private partners.

The purpose of the meeting was to look at the St. John's River in Florida. It is a navigable waterway. And, see if it had potential to be designated as a Marine Highway connector to the M95 waterway that flows from Maine to Miami. Of course, that is the Atlantic Ocean to anyone else in the system. And at the meeting, we had representatives from Jacksonville, all the way to Stanford, Florida. We had representatives from an MPO in Florida and they are now pulling together a package to propose the route. To them, this adds redundancy to their system. They have the I-95, that is the red line there, they have the CSX railroad, and now they believe that they will have water and can share the capacity. In the event that there are hurricanes that knockout part of the roadways, maybe there is a bridge in there that perhaps the water could carry it.

But, they have identified all of the bridges along the waterway, and the state has said that there is one bridge that is slated to be totally redeveloped and renovated. And, that bridge, they promised, will be done at a height that will enable future barges and small vessels to go underneath it. So, they are looking at the height above the water to make sure there is not an air draft restriction for water on future freight potential.

Another thing that has been brought to our attention is that there are designated hazmat routes handled by different agencies of USDOT. Not every state designates hazmat routing. The railroads are responsible for designating their own routing, and then DOT looks to make sure that the route designated by the rail that year is an appropriate route.

We have been contacted by the Department of Homeland Security and they wanted to know why DOT wasn't including water as a possible hazmat route. So, we are working with the Pipeline Hazardous Material Safety Administration and will be reaching out to FMCSA and FRA and having multi-agency meetings to talk about: should waterways be considered a hazmat route? And if so, would states be interested in some sort of a designation program? It won't cost anything, but just maybe something that would help enhance the system and enhanced planning for the system.

The Department of Homeland Security has a federal advisory committee. And, they are pulling together a proposal to make a recommendation to the secretary for the Department for Homeland Security, that marine highways be designated as a hazardous materials route for certain hazardous materials to provide redundancy to the system.

Our vision for the Marine Highway going forward is to have a reliable, regularly scheduled, economically competitive and sustainable service, sustainable meaning environmentally sustainable and economically sustainable. That employs US ships and tugs, and that it is a routine choice for transporting freight and passengers.

And, it is not easy. It is kind of like solving a Rubik's cube. There are lots of different things. We have to measure demand with supply. Shippers are asking for incentives in order to consider the service. There are startup funding risks. We don't have the right size vessels in many markets. Maritime is not considered part of surface transportation systems for many policies and some policy change are being looked at to see how we could possibly tweak them to make sure that maritime is able to be considered as a supporting part of the system. Fuel costs are going up. Some people are saying that they want carbon trading. There are all sorts of things that we are looking at. But, what are we focusing on?

So, for fiscal 2013, we are focusing on three areas. We want to incorporate and help incorporate Marine Highway corridor and crossings into state freight system plans in order to improve infrastructure and efficiencies, especially for export and heavyweight freight and possibly certain hazardous materials. Heavyweight freight is the one of the most damage to the highway. And, the water can handle it just fine. So, that is a real focus area for us.

The second thing is, we want to encourage development of marine highway projects, and we are going to be publishing a call for projects. It'll be the first time that we are doing this since 2010. The motion to call for projects will be in the Federal Register in just a few months. And, it'll have a long lead time for applications. Applications are going to be due on May 1. So, look for a Federal Register notice from MARAD on a call for projects.

And then, we will be working with new and existing marine highway services, leading them hopefully towards long-term sustainability. And, that is it. I did not take the full 60 minutes. So, I guess that we are ready for questions.

Q&A

Nicholas Kehoe

Thank you, Lauren. I'd now like to start off the Q&A session with the questions posted online. Once we get through those questions, if time allows I'll open up the phone lines for additional questions.

And, before we begin, it was noted that some participants were having issues downloading the PowerPoint. We have uploaded a PDF version of that, to try to alleviate those issues. But, we will send out a notice once the PowerPoint is available online. We will go to the first question.

If some waterways are seeing reduced drafts, then Marine shipping is impacted. Any changes in prioritizing maintenance dredging in MAP-21?

Lauren Brand

The Maritime administration has just signed an interagency cooperative agreement with the US Army Corps of Engineers. We are working with core field offices on specific Marine Highway corridors, looking to see what are the freight flows, what are the requirements in order to get dredging as a priority. You know, do they have a service or looking to start a service? The relationship is in its infancy. And MAP-21 is really a highway bill and does not address dredging at all. So, I think our best bet, right now, in terms of what MARAD can do, is coordinate with the core and see how we can influence core priorities through bringing to their attention the Marine Highway program, and what freight we know it's moving.

Nicholas Kehoe

Okay, thank you. The next question posted in the chat is, on the 64 express, if the subsidy was to disappear, with the service continue?

Lauren Brand

The subsidy for the 64 express -- let me clarify this, first. The state has put funds into it, and the MPO has put funds into it. The marine highway grant they received was for equipment and is not an operational subsidy. The state and the MPO support this service with funds because of the public benefits that it provides. And, they don't view it as a subsidy.

If it costs so many millions of dollars to fix the roadway, or, you could spend thousands of dollars or hundreds of thousands of dollars, instead of millions, and have a service that relieves the heavy freight from the congested roadway, and thereby saves you dollars, that is a public benefit.

So, for the 64 express, particularly, I just don't think that question is the right question.

Nicholas Kehoe

At a recent Northeast freight rail conference, presenters remarked that marine transports from the Far East, through the Suez Canal, to East Coast ports are increasing significantly and that on dock rail exists at four of the six major East Coast ports. And near dock is available at the other two. You mentioned short sea-linked truck transport. What is the role for rail?

Lauren Brand

You know, it is all intermodal. I had a great expense when going to Paducah, Kentucky. And when they first told me, I said where? I had to look it up on the map. I did some research and found that that this is where three of our significant waterways come together. Over 450 million tons a year flow through Paducah, KY. They have, I think, two significant interstates that go past it. It is a transportation hub that America does not even know about. And, I was able to sit in and meet with the presidents of some of the rail roads there. And, the rail roads were the only ones on their website who said, we connect to the water and to the road, to truck services.

The trucks did not say: we connect to rail and water. And, the water service did not say, we connect to rail and truck. But, the rail said, we connect to water and truck. And, you know, that is the only way the people are going to start to see that we have a system, is if our service operators put on their website and advertise that they connect to the other mode. And, the rail is doing it. We are working with the CSX, talking to them about the Marine Highway service that is looking to be established in the Gulf.

We are working very hard with Brownsville, Texas and Manatee, Florida, two seaports, to get a service going between them, because, it is 400 miles shorter to go by water between those two ports than it is to go by truck. And, there was a service there that existed. In 20 months, it moved 25,000 truckloads of heavy freight or oversize freight, and 65% of those loads went on the CSX, and it was freight that originated in Mexico, went over the water across over to Manatee, and connected to the CSX and destined for the Carolinas. So, we are not ignoring rail. You are right, I spoke mostly about trucks today, and I apologize for that. But, it is intermodal and is an extremely important part of the system.

Nick Kehoe

Thank you. The next question is: do you know the Maritime coordinator for the state of Missouri?

Lauren Brand

The lady that we work with mostly is Sherry Turley, and I used to know her boss when it was Ernie Perry, but he has moved on to a different job. And, I am sorry that I have not memorized his replacement's name. But, we work mostly with Sherry Turley.

Nicholas Kehoe

The biggest inhibitor in the Marine Highway program is labor, particularly the ILA and the ILWU. The Virginia example works, because BPA controls the Marine terminals at both ends. The Oakland Stockton project is not moving forward because the ILWU will not agree to a barge managing structure. This has been labor's response to every project in which I have been involved. Recognizing that MARAD is charged with considering impact on labor, MARAD should implement regulations that limit labor's ability to disrupt viable projects.

Lauren Brand

I understand your sentiment. And, I invite you to call me separately. But, I would like to say that this is the United States of America, and the federal government does not tell labor what to do or what not to do. And, we never will.

The labor is working with us in Stockton, and I can tell you that what you stated is not the complete picture. And so, it gives the wrong impression to say just that. But, because there are business agreements and negotiations going on that the federal government is not part of, I just cannot say more at this time just to say that that is not a complete picture. But please, if you want it, call me and we can have a discussion off-line.

Nicholas Kehoe

And it looks like Barbara Nelson added in the chat, a response to that question as well, stating that the ILA is involved in the enhancement of roads, and for the first three years of service, BPA did not control support at both ends.

Lauren Brand

Well said, Barb, good point. And the other thing, I want to say from the ILA's point of view, they do have a small boat clause in their labor agreement. And, those are important for many of the Marine Highway services.

Nicholas Kehoe

Has MARAD analyzed the influence of drought on the MHI system, with respect to multimodal freight and capacity for MHI corridors?

Lauren Brand

Yes, do you mean on the inland water? I mean, do you mean draft or do you mean drought? I am not sure which were they are trying to spell there. For the Marine Highway, you know, for the inland waterway, the drought has impacted some of the movement on the ten-ton waterway, part of the Mississippi and Missouri. For draft, Marine Highway is a good project for a port that does not have deep drafts. They find the deepest drafts for Marine Highway services at 28 feet, some of them can go down to 14 feet. Most inland waterways can accommodate 14 feet.

Nicholas Kehoe

What is the draft of the Mississippi from New Orleans to St. Louis?

Lauren Brand

I don't know that the Marine Highway services are running 14 feet and that they can handle that.

Nicholas Kehoe

It seems that funding is available to drudge and maintain waterway depth. Why is funding not being authorized?

Lauren Brand

The funding is authorized by Congress, and there is a bill right now being considered that, in Congress, will authorize use of all of the funding in the account for dredging.

Nicholas Kehoe

Why is bulk cargo excluded? It too can go by truck. Such as grain and building materials. All of the advantages of moving those products off land highways to water exist where highways exist.

Lauren Brand

We agree with you completely. It is just that we don't need federal government to encourage folks to move on the water. The majority of our bulk does move on the water already. The only reason that we, you know, Congress mandated this program and legislated in 2007 is because they wanted to see containerized freight move on the water. And, roll on roll off rate freight on the water.

And, the market is not doing that. So, as the government agency, we are trying to figure out on a national level, what are the impediments? Why is the market willingly putting cargo on the water when it is containerized or when it's roll on/roll off? You know, we just want to see what we can do. What obstacles do we need to get out of the way to take over and get these services going?

Nicholas Kehoe

A financial industrial analysis at the same northeast freight rail event implied that there was too much spending on dredging and East Coast ports. And, we only need three deep water ports, New York, Norfolk, and Savanna. Is this consistent with your vision for the Marine Highway network on East Coast?

Lauren Brand

You know, we are not here to pick winners and losers. And, we are here to help the market find its way and incorporate the use of water into their intermodal planning. There is a lot of opinion on this, all different ways. You know, the US Army Corps of Engineers has authorized Miami to go to 50 feet. I see that Miami is not on your list of deep water ports. Norfolk is a naturally deep water harbor. New York is authorized to go to the right depth. Savanna and Charleston compete tremendously. So, you know, whoever put their package together and gets it going is fine. For Marine Highway services, there are a number of different scenarios. The Marine Highway services can be used as feeder services to and from US ports carrying loads that originated from an international service. So, a Marine Highway service could be a service between New York, New Jersey, and the state of Maine.

Another Marine Highway service could be a hub and spoke system, where it handles domestic freight to and from a number of ports just like airlines have their hub and spoke systems. So, we are not there, yet. I cannot say what it's going to look like. If I limit myself to one thing, I will be limiting the whole program by my imagination. So, we are really open to everything and we are analyzing it. This is a real, live program that changes as trends tell us to evolve.

Nicholas Kehoe

As the American Marine Highway gets up and running, is it likely to take freight from railroads first, than highways, especially since rail freight is less likely to be time sensitive?

Lauren Brand

You know, that is an interesting question, Jim. But, I think the way I'm going to answer it is the Marine Highways seems to be attracting heavyweight freight, first. And then, second, it is attracting oversized freight that cannot go on the railways. And, that would require escort vehicles when it goes by road. So, you know, I can't take from one and the other. Our freight volumes are growing. Green Highway services are going to be capturing just a small, small percentage of the actual freight. I don't see where it is going to hurt rail roads. Where trucks become customers of railroads in the 1970s and it is a growing customer base for railroads today, I see railroads and trucks being a growing customer base for Marine highways and the three of them working together in an efficient manner.

Nicholas Kehoe

The next comment seems to be an add-on to what was said earlier. Ernie Perry is now the director of the Mid-America Freight Coalition at the University of Wisconsin.

Lauren Brand

And a smart guy.

Nicholas Kehoe

And I believe the comment below is in addition to the earlier comment about draft and it was specifically, how is draft affected by drought?

Lauren Brand

Okay, on some of the waterways it has impacted the services.

Nicholas Kehoe

Are you looking at the impact of the Jones Act on the Marine Highway Program?

Lauren Brand

The Jones Act is very much a part of the Marine Highway program, and, if you want to call me, we can talk off-line about it. MARAD is a supporter of the Jones Act, it is necessary for the security of our nation. We are working closely with the Jones Act carriers and ship builders. We are actually working with the program with the military to see if it is possible to have the military fund the building of commercial Marine Highway vessels that could also then be used in the time of war. Because, we lack adequate US flag vessels to support our national needs.

So, we view the Jones Act as being an integral part of the Marine Highway program.

Nicholas Kehoe

Does MARAD have a seat on the freight policy counsel, established by MAP-21, which will determine the scope of the national freight policy and network?

Lauren Brand

Yes, we do. Our representative is deputy administrator Paul Janik. He is a great guy. He is a very active member on the council.

Nicholas Kehoe

We have a couple of questions regarding MAP-21. How much has funding been appropriated? Are there allocations by state? Is there a match requirement and have there been any changes to the Tiger grant program for moving from MAP-21?

Lauren Brand

Okay, MAP-21 is basically Title 23, which is all highway. So, when it relates to ports, it says that- it is like a 600 page legislation, and believe it or not, I have read a lot of it- It has a requirement...not a requirement, but it encourages states to establish state freight advisory committees. On those committees, they are encouraged to have stakeholders that include sea ports. MAP-21 has some programs in it that will help fund connectors to the ports. So, that'll be that last mile that we often call it. MAP-21 requires the Secretary to develop a national freight plan, that national freight plan will be derived from state freight plans. State freight plans, you can read them right now. There are a number of states that have them, and they are either available on the FHWA website.

A number of those have water components to them already. Those that do not have a water component, but that have a State freight plan and that are on a marine highway corridor, we will be reaching out to those states to see if there is some way that we can answer any questions for them, or possibly providing some assistance in looking at the State freight plan to see if water should be part of their freight plan going forward. And, I see a question about TIGER. There is no TIGER provision at this time. So, the TIGER discretionary grant program had four rounds and there is not a fifth-round legislated.

Nicholas Kehoe

Okay, at this time, I do not see any additional questions type into the chat. But, it does appear that people are typing.

We will go ahead and start reading the closeout information here. Please feel free to type in any questions you have while I am reading this, and I will go back and check before we closeout.

But, thank you all, today, for attending the seminar. The recorded version of this event will be available within the next few weeks on the talking freight website. As a reminder, if you are an AICP member and would like to receive 1.5 certification maintenance credits for attending the seminar, please make sure that you were signed in the day with your first and last name, or that you type your first and last name into the chat box if you are attending with a group of people. Please download the evaluation form and e-mail it to me after you have completed it.

You can also download the CM credit instructions if you are unsure how to achieve your credits for two-day seminar. The next seminar will be held on November 14, on the topic of freight train transportation role in economic development, though registration is not yet available. Please visit the talking freight website shown on the slide of this screen to register when it becomes open. And, we will send out an e-mail at that time.

I also encourage you to join the freight planning listserv, if you have not already. And, it does look like we have another question type into the chat:

Thanks for the reply on bulk cargo. Just keep in mind that having a designated Maritime Highway would provide additional support to working priorities for maintenance dredging. If you keep the draft for that movement, you then ensure that containerized freight movement stays an option.

Lauren Brand

Well said, thank you very much.

Nicholas Kehoe

And, with that I do not see any other questions type into the chat. And, I do not see anyone else typing. So, I thank you for your participation today. And, I hope that you have a great day.

Thank you.

Updated: 01/07/2013
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