Fairplay’s feature story, titled “Wholesaling a service gap” (PDF), profiled HML and the work it has accomplished.

Stephen Pepper is anxious to prove that government money can spark demand for a service that supply and demand alone has yet to achieve.

Pepper, the president of Humboldt Maritime Logistics, says that he and partner Abraham Hyatt have figured out a way to provide box capacity for international and domestic shippers along the US West Coast that complements – rather than competes – with ocean carriers and long-haul trucking companies. HML’s Blue Coast Intermodal (BCI) is an $80M container-on-ocean barge system that Pepper and Hyatt plan to market as a wholesale service to liner operators and truckers as extensions of their own services.

The scheme, known by government officials as the West Coast Hub-Feeder Project, was awarded $275,000 in September by the US Department of Transportation to help get it off the ground. It was one of several projects for which the DOT provided a total of $7M to either kick-start or expand in support of a national Marine Highway programme.

Washington Monthly’s Phillip Longman took a bigger picture view and looked at maritime freight on a national scale.

One entrepreneur who is very aware of such calculations is Stephen J. Pepper, founder of Humboldt Maritime Logistics. Pepper is trying to start a service that would allow shippers to move containers by barge from the port of Oakland up and down the Pacific coast. At current fuel prices, he says, such a service is cost competitive with trucks, but only barely so. With even a modest uptick in fuel prices, though, the numbers would shift dramatically in favor of barge over truck.

Thompson (pictured above with HML founder Stephen Pepper) was a crucial supporter of Blue Coast project, and he said that the “U.S. Department of Transportation’s Maritime Administration grant is a step toward revitalizing Humboldt Bay as a harbor, which would bring jobs and provide for more efficient and cleaner shipping.” According to Thompson, “he was immediately sold on the idea of having a feeder barge service that moves goods from smaller ports to larger ones, and that the Secretary of Transportation understood the potential for the project.”

”This first phase is an emphasis of that commitment,” Thompson said.

Read his full announcement here.

Humboldt Maritime Logistics and the project’s sponsor – the Humboldt Bay Recreation and Conservation District – will use the money in conjunction with the Golden State Marine Highway Initiative to finalize research that HML has conducted.

“This is a decisive moment for transportation on the West Coast,” said HML founder Stephen Pepper. “The environmental and economic repercussions of this project extend through multiple states. This funding is a strong message to both the private and public sectors that Washington D.C. is serious about finding Marine Highway solutions.”

“This is a key opportunity to demonstrate the benefits and viability of moving freight on the water,” said David T. Matsuda, head of the Maratime Administration, when the funding announcement was made. “These grants will help a long overlooked means of transporting goods finally grow.”

Humboldt Maritime Logistics President Stephen Pepper said his company is currently seeking $1.5 million for a West Coast market analysis and a study of what kind of equipment will best suit the service’s needs. The Transportation Department’s determination means the company and the Harbor District are now in a much better position to receive federal funding.

”It kind of pipes us for their assistance,” Pepper said.

Read more.

Earlier this week, Secretary Ray LaHood announced his selection of the maritime projects that will be eligible for federal assistance. Here’s the media fallout so far:

(logisticsmgmt.com) DOT announces various America’s Marine Highway efforts make cut for federal funding
Following an April announcement signaling the launch of “America’s Marine Highway” program, an effort to shift freight to waterways from congested U.S. highways, the United States Department of Transportation announced the marine highway corridors and an initial eight projects and six initiatives along the corridors that will be available for federal assistance through this effort.

(strtrade.com) DOT MOVES AHEAD WITH PROJECTS TO EXPAND WATER TRANSPORTATION OF CARGO
The Department of Transportation’s Maritime Administration has announced the availability of $7 million in grant funding for projects to further develop marine highways. DOT also announced Aug. 11 the initial projects and initiatives that will be eligible for this and other federal assistance. Grant Funding. The grant funding is designed to expand the use of water transportation of cargo and passengers by supporting specific projects that will create new or expanded services along designated marine highway corridors. MARAD has also established selection criteria and requirements for applications for these grants, which must be received by 5:00 p.m. ET on Aug. 27.

(ccjdigital.com) DOT announces corridors for marine highway program
The U.S. Department of Transportation’s Maritime Administration has chosen to designate 14 corridors under its new America’s Marine Highways program and announced construction projects related to eight of them and various other initiatives for the other six. The eight projects are eligible to apply by the end of the month for a share of $7 million available for funding. Transportation Secretary Ray LaHood announced the America’s program four months ago, saying it would relieve congested highways.

(theday.com) Ct. looks to sea to ease road congestion
Connecticut is one of eight states selected to compete in America’s Marine Highway Program, a federal Department of Transportation initiative to encourage use of waterways to reduce traffic congestion and move freight along the country’s coastlines.

(marinelog.com) Marine Highways program gets a road map
A short sea shipping initiative called for in the 2010 National Defense Authorization Act (NDAA) has taken a significant step forward. U.S. Transportation Secretary Ray LaHood today identified 18 marine corridors, eight projects, and six initiatives for further development as part of “America’s Marine Highway Program.”

(businesswire.com) U.S. DOT Selects Port Manatee Project for America’s Marine Highway Initiative
Container-On-Barge Trans-Gulf Service Between Port Manatee And The Port of Brownsville, Texas One Of Eight Projects Selected Nationwide. The Manatee County Port Authority received word today that U.S. Department of Transportation Secretary Ray LaHood announced the designation of 18 Marine Highway Corridors and eight Marine Highway Projects that are now eligible to compete for federal funding through America’s Marine Highway Program.

(brownsvilleherald.com) DOT selects Brownsville-Port Manatee for national program
The Port of Brownsville’s “short-sea” shipping route with Port Manatee, Fla., has been designated part of the America’s Marine Highway Program, an initiative of the U.S. Department of Transportation aimed at transferring a portion of U.S. cargo from overcrowded highways to waterborne vessels and America’s underused waterways.

(connecticutplus.com) Connecticut selected to compete for ‘Marine Highway’ initiative funding
Governor M. Jodi Rell announced today that Connecticut has been selected by the U.S. Department of Transportation to compete in “America’s Marine Highway Program” — a USDOT initiative encouraging the development and use of waterways to help mitigate traffic congestion and move freight along the country’s coastlines. “We are remaking our entire transportation structure in Connecticut, and this is an important part of our vision. It is an innovative alternative way to address traffic and freight issues on Connecticut roads and highways,” Governor Rell said.

(fleetowner.com) Trucks at Work Blog
Marine highways get more funding: The U.S. Department of Transportation is starting to put more its money (which, of course, is the taxpayers’ moolah; greenbacks generated by you and me) where its mouth is in terms of supporting “water-borne” intermodal connections. Just four months after unveiling the America’s Marine Highway Program, the DOT’s Maritime Administration is making $7 million worth of funds available to start work on some eight projects and six initiatives along the “maritime highway” corridors – which includes inland waterways and coastal sea routes – out of some 35 applications submitted by ports and local transportation agencies.

The joint project is one of 14 groups and agencies in the nation (and one of only two on the West Coast) to achieve this status. The designation allows HML and the Harbor District to apply for funding that’s part of the America’s Marine Highway initiative, including $7 million being made available this week.

“We’re honored that we’re one of the few projects in the nation to have been selected,” said HML president Stephen Pepper. “This is a project with significant economic and environmental impacts. It’s supported by both the public and private sectors on the national and local level, and this thumbs up from the DOT brings us one step closer to getting barges in the water. We’d like to thank the District and Rep. Mike Thompson’s office for their support and hard work in getting the project to Washington D.C.”

The top projects were chosen from 35 applications submitted by agencies along the West, East and Gulf Coasts, the Great Lakes, and inland waterways.

“Making better use of our rivers and coastal routes offers an intelligent way to relieve some of the biggest challenges we face in transportation – congestion on our roads, climate change, fossil fuel energy use and soaring road maintenance costs,” LaHood said when annoncing the top projects. “There is no better time for us to improve the use of our rivers and coasts for transportation.”

Lori Baer, from AECOM’s Sunrise, Fla., office, attended the meeting to update commissioners on the firm’s progress on the plan, which leaders say should position the port to remain competitive in a changing maritime industry.

Baer said the firm is especially focusing on Brazil — which represents a “huge market” and opportunity for growth, she said — and short-sea shipping.

The plan will replace the existing one, which was developed in 1996 and updated in 2004, port Director Mark McAndrews has said.

It will outline short- and long-term recommendations to help the port grow, and it will include detailed market analyses, the company said.

“They’re making pretty good progress on it, and we should have it by the end of this calendar year,” McAndrews said. “The biggest challenge is to make sure the recommendation and opportunities are really there and are attainable.”

Read more.

“This was highlighted by a 1999 U.S. International Trade Commission economic study, which suggested that a repeal of the Jones Act would lower shipping costs by approximately 22 percent. Also, a 2002 economic study from the same Commission found that repealing the Jones Act would have an annual positive welfare effect of $656 million on the overall U.S. economy. Since these studies are the most recent statistics available, imagine the impact a repeal of the Jones Act would have today: far more than a $656 million annual positive welfare impact – maybe closer to $1 billion. These statistics demonstrate that a repeal of the Jones Act could prove to be a true stimulus to our economy in the midst of such difficult economic times.

“The Jones Act also adds a real, direct cost to consumers – particularly consumers in Hawaii and Alaska. A 1988 GAO report found that the Jones Act was costing Alaskan families between $1,921 and $4,821 annually for increased prices paid on goods shipped from the mainland. In 1997, a Hawaii government official asserted that ‘Hawaii residents pay an additional $1 billion per year in higher prices because of the Jones Act. This amounts to approximately $3,000 for every household in Hawaii.’”

“This antiquated and protectionist law has been predominantly featured in the news as of late due to the Gulf Coast oil spill. Within a week of the explosion, 13 countries, including several European nations, offered assistance from vessels and crews with experience in removing oil spill debris, and as of June 21st, the State Department has acknowledged that overall ‘it has had 21 aid offers from 17 countries.’ However, due to the Jones Act, these vessels are not permitted in U.S. waters.

“The Administration has the ability to grant a waiver of the Jones Act to any vessel – just as the previous Administration did during Hurricane Katrina – to allow the international community to assist in recovery efforts. Unfortunately, this Administration has not done so.

“Therefore, some Senators have put forward legislation to waive the Jones Act during emergency situations, and I am proud to co-sponsor this legislation. However, the best course of action is to permanently repeal the Jones Act in order to boost the economy, saving consumers hundreds of millions of dollars. I hope my colleagues will join me in this effort to repeal this unnecessary, antiquated legislation in order to spur job creation and promote free trade.”

The Detroit-Windsor Truck Ferry (Photo courtesy Detroit-Windsor Truck Ferry)

Two major studies

Dr. Rockford Weitz is a Senior Fellow at the Institute for Global Maritime Studies and co-author of the September 2008 study “America’s Deep Blue Highway: How Coastal Shipping Could Reduce Traffic Congestion, Lower Pollution, and Bolster National Security.” Weitz prefers the term “coastal shipping” because he excludes brown water operations from his research and believes “short-sea shipping” is not a very useful term to get those “people in Washington, who don’t know the difference between a bow and a stern, onboard with this.”

Read more.

The number of applicants beat all previous calls launched since 2007 (70 proposals received in 2009, 46 in 2008 and 55 in 2007). Altogether, the funding requests arising from the 101 project proposals amount to €235 million this year, against an annual programme budget of €64 million.

The 2010 call attracted proposals in all five Marco Polo key actions, with ‘modal shift’ in the lead for the number of submissions and short sea applications playing a large part. Further, nearly one tenth address inland waterways transport.

“The excellent response to our call goes to show that the transport industry around Europe is receptive to the Marco Polo message. With the first signs of economic recovery, the idea of a more sustainable, efficient transport system around Europe does appeal to the transport and logistic business. This encourages us in our efforts to promote the funding opportunities available under Marco Polo, and to provide prospective applicants with the assistance they need.” said Patrick Lambert, director of the Executive Agency for Competitiveness and Innovation (EACI), which is in charge of managing the programme.

Read more…