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2012 Issue II

INTERMODAL

the next generation

Panama Canal Expansion Part 3 Mexico’s New Interoceanic Highway Maritime Courses at Texas A&M Galveston


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Jennifer Carpenter American Waterways Operators Sr. Vice President-National Advocacy, AWO www.americanwaterways.com

INLAND PORT MAGAZINE 2012 Issue II Volume IV ISSN 2156-7611

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Inland Port 2012• Issue II

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Panama Canal Expansion and the Trend to Larger Vessels

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SMART BUSINESS

Part 3 of the series by Randolph R. Resor, USDOT Policy Advisor and Eric Gabler, US Maritime Administration Economist

Mexico’s Interoceanic Highway to Compete with Panama Canal and Extend Inland Waterway Hinterland By Joseph P. Linck, Jr., NAFTA Marine Company

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RISK AND REWARD

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Protecting Modern Logistics By Daniel Negron, Thomas Miller Americas

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Toward a 3rd Generation Intermodal Transportation Blueprint for the Nation By Arno Hart, RNO Group

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Protecting Our Inland Waterway System By Michael McQuillan, Hanson Professional Services

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22 Garrison Retires from Arkansas Waterways Commission

Interview with IP Editorial Board member, Keith Garrison

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23 Inland Waterways Course at Texas A&M Galveston Interview with instructor, Mike Donelan

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Industry Notebook

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Panama Canal Expansion and the Trend to Larger Vessels

PART 3 of 3 By Randolph R. Resor USDOT Policy Advisor and Eric Gabler US Maritime Administration Economist


Many factors – including the effects of slow steaming on inventory costs, fuel cost fluctuation, climate, and the readiness of East and Gulf Coast ports to handle very large ships –will play into how the Panama Canal expansion eventually impacts US ports. However, as we learn in the last of our 3-part series, one thing most experts agree on is that the changes will come gradually.

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he conventional wisdom is that high fuel prices favor water transportation over land transportation, and that a continuation of high energy prices will favor all water routings with a minimum inland component. This assertion, while generally correct, requires some qualification. Inland connections using rail intermodal services are increasing energy efficient. For smaller vessel sizes of 2,000 TEU or less the fuel efficiency of trains is almost comparable on a ton-mile basis. For larger vessels sizes, however, the real fuel economies of water emerge. An 8,000+ TEU container ship will be 2 to 3 times more fuel efficient per ton mile of containerized freight than a train (based on carbon emissions – see IMO, pp. 174-177). All-water routings through the Panama Canal, however, are more circuitous than direct routings to West Coast ports with intermodal connections eastbound (for instance, it is 5,900 miles by water through the Canal from San Francisco to New York vs. 3,300 miles by rail). This higher circuity serves to erode some (but not all) of the ton-mile advantage of water. Most significantly, however, high fuel prices have led to a new regime of slow steaming (operating at vessels at speeds significantly lower than their design speeds), which, while reducing fuel consumption, also contributes to the a widely cited disadvantage of all-water transportation relative to land bridge rail, which is longer delivery times. Prior to slow steaming, the transit time from Eastern Asia to Seattle was 13 days, with another 8 days by rail

2012 Issue II

to New York (5 days to Chicago). An all-water trip to New York via the Panama Canal takes 26 days, 5 days longer than land bridge (Rodrigue, pp. 27-30). With regard to locations inland from New York, one must also add delivery days to the Panama Canal service while deducting days from the West Coast land bridge service, leading to even greater time differentials (e.g., a total of 18 days to Chicago by West Coast land bridge and 28 days by all-water East Coast land bridge. Slow steaming can add up to 5-7 days to transit times over long distances, and 3-4 days to the differential between West and East Coast services. Assuming 4 days, this extra time would (at $12 per TEU per day) undo more than half of the cost savings to shippers attributable to larger container ships, in addition to other impacts described above. Of course, if the carrier passed along the fuel cost savings of slow steaming to the shipper the impact might be neutral, but there has been strong criticism from the shipping community that savings are not being passed to them. The National Industrial Transportation League, in response to a recent inquiry from the Federal Maritime Commission about slow steaming, stated that, “… carriers appear to have retained the economic benefit of slow steaming for themselves” (American Shipper Florida Connection, 2011). Ultimately, the fuel advantage of large ships requires that they obtain sufficient volumes of containers to utilize them fully and is further complicated by the regulatory environment governing marine fuels.

Drewry notes that, “The parallel campaigns to remove sulfur and CO2 from bunkers will certainly result in costlier marine fuel, eroding some of maritime transport’s cost advantage. In such circumstances, the level of cost advantage for all-water modes is impossible to quantify, and any predictions will be at best unreliable” (Drewry, p. 13). The extent to which higher quality bunker fuel will affect shipping rates is uncertain, but it serves to illustrate that comparisons between ship sizes and transportation modes based on fuel efficiency alone tell only part of the energy cost picture.

WEST COAST PORT CONGESTION AND NEW CAPACITY The US West Coast ports – particularly the Ports of Los Angeles and Long Beach – sustained damage to their reputations among shippers for reliability and service quality in the last decade due to severe congestion and labor issues. This problem was exacerbated to some extent by necessary port and governmental efforts to reduce the environmental impacts of the ports on surrounding communities. As a result, some carriers diversified away from reliance on the US West Coast to provide direct service to the US East and Gulf Coasts via the Panama Canal and to new port capacity in Canada and Mexico. US West Coast ports have, in turn, responded vigorously to reduce congestion and to resolve environmental issues. Cambridge Systematics provides a good summary of these improvement efforts (Cambridge Systematics, Chapters

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6-8). For instance, the Ports of Los Angeles and Long Beach have numerous important capacity and environmental projects completed or underway, including the Gerald Desmond Bridge Replacement and Southern California National Freight Gateway (to name just two efforts). These ports also established the PierPass program under which the international container terminals in the two ports established five new shifts per week, using a traffic mitigation fee to encourage use of these new shifts. PierPass has helped to greatly reduce congestion from 2004 levels by nearly doubling the number of port operating hours per week – effectively adding capacity without requiring additional infrastructure. The Port of San Diego is adding container storage space and produce handling capacity. The Port of Seattle is dredging the East Waterway of the Duwamish River to 51 feet for more container berths and has developed a Freight Action Strategy for Seattle-Tacoma corridor improvements. The Port of Tacoma is undertaking projects to extend a berth and improve rail and truck access. The Port of Portland is working on the Columbia River Channel Deepening Project and improving access to its terminals. The Port of Oakland is making numerous improvements to terminals (Ports America), the Outer Harbor Intermodal Terminal rail yards, and other projects. West Coast ports are stressing environmental sustainability, making use of marine vessel speed reduction, cold ironing (shore power), clean fuels, longer gate hours, clean 5


cargo handling equipment (replacing diesel-fueled drayage trucks and cranes), air quality monitoring, antiidling technology for equipment and trains, radio frequency identification (RFID) or GPS tags on trucks for 6

tracking and staging, appointment systems for truck visits, virtual container yards, clean truck mandates, and fee reduction for cleaner ships (Cambridge Systematics, pp. 7-1 to 7-2). While some of these initiatives

must inevitably raise costs, it seems unlikely that they will divert significant quantities of cargo to other ports or coasts since other ports must implement similar environmental protections.

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US West Coast ports are also seeing rising competition from the north and south. The Canadian port of Prince Rupert, with land bridge service to Chicago and beyond, will be able to handle 2 million TEU by 2012 Issue II


REFERENCES 1. 2. 3. 4. 5. 6. 7.

8.

9. 10.

11. 12. 13. 14.

15. 16.

17. 18.

19.

20.

21. 22. 23.

2020 compared to no container traffic a decade ago. A second container terminal could enable the port to handle up to 5 million TEU by 2020 (L. Fan et al., p. 736). Port Metro Vancouver is expanding with the 2012 Issue II

http://www.globalsecurity.org/military/facility/panamacanal-third-locks.htm Alphaliner Monthly Monitor. Container Freight Watch. August 2011 Alphaliner Weekly Newsletter. Volume 2011 Issue 25. Alphaliner Weekly Newsletter. Volume 2011 Issue 34. Arnold, Greg and Peters, Mike. “Global Supply Chain Trends and the Impact on North American Distribution Market”. 2007, p. 19. Autoridad del Canal de Panama (Panama Canal Authority or ACP). Proposal for the Expansion of the Panama Canal. April 24, 2006. Autoridad del Canal de Panama (Panama Canal Authority or ACP), “Tolls Assessment,” Updated November 13, 2010, at http://www.pancanal.com/eng/ maritime/tolls.html) Baird, Tim, Bittner, Jason, Gollnik, Robert, and Gardner, Spencer. Understanding the Consequences of the Panama Canal Expansion on Midwest Grain and Agricultural Exports. University of Wisconsin– Madison, May 2011. Business Facilities: The Location Advisor. “The Canal Gets Bigger, and U.S. Ports are Ready.” April 1, 2011. Cambridge Systematics, Inc. Port Activity Competitiveness Tracker. Prepared for the Southern California Association of Governments, February 2011. Daily Fairplay News. “‘Illiquid’ Panamaxes seen.” August 23, 2011. Drewry Shipping Consultants. US Transpacific Intermodal Today and Tomorrow. September 2008. Dupin, Chris. “Shippers, carriers spar on slow steaming.” American Shipper Florida Connection, April 22, 2011. Economic Development Research Group. Panama Canal Expansion Study Phase 1 Report: Developments in Trade and National and Global Economies (Draft), prepared for the U.S. Department of Transportation/Maritime Administration, June 2011. Elswijk, Joey van. Slow steaming in the liner shipping industry. Bachelor Thesis, Erasmus Universiteit Rotterdam, July 2011. Fan, Lei, Wilson, William W., Tolliver, Denver. “Optimal Network Flows for Container Imports to the United States.” Transportation Research Part E, December 2009. GlobalSecurity.org website at http://www.globalsecurity.org/military/facility/panama-canal-third-locks.htm. Inland Port Logistics Conference, Chicago, June 2011, presentation by Jeffrey Heller, Group Vice President International Intermodal of Norfolk Southern Corporation. International Maritime Organization, Report MEPC 59/INF.10 ANNEX, April 9, 2009, “Prevention of Air Pollution from Ships, Second IMO GHG Study 2009,” pp. 174-177). Knight, Kevin. “The Implications of Panama Canal Expansion to U.S. Ports and Coastal Navigation Economic Analysis.” Institute for Water Resources, U.S. Army Corps of Engineers, December 2008. OxResearch Daily Brief Service. “INTERNATIONAL: Asia continues to drive energy trade.” Oxford: Jul 06, 2009. pg. 1. Rodrigue, Jean-Paul. Factors Impacting North American Freight Distribution in View of the Panama Canal Expansion. Van Horne Institute, 2010. U.S. Naval War College. Global Shipping Game: Game Report, Prepared by Doug Ducharme and Hank Brightman, Newport, RI, December 8-9, 2010.

Deltaport Third Berth and Terminal 2 project expansion (Cambridge Systematics, p. 6.3). Mexican ports are expanding as well. Manzanillo currently handles bulk and containers. Lazaro Cardenas is served by

Kansas City Southern Railway de Mexico and can handle 12,500 TEU vessels. Cambridge Systematics reports that “a slow but noticeable shift in total TEU percentage is occurring from US West Coast Ports

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to Canadian and Mexican West Coast Ports. This is a result of newly opened Ports, such as Prince Rupert in Canada, as well as changes in shipper distribution strategies” (Cambridge Systematics, p. ES-1). Collectively these and future projects will mitigate port congestion on the West Coast and provide more options for carriers to bypass the busiest ports on that coast. As such, it is likely that they will mitigate a major cause of the growth of allwater routings through the Panama Canal during the last decade, putting the greater burden of driving future traffic growth through the Panama Canal on voyage cost reduction rather than supply chain risk reduction.

EAST AND GULF COAST PORT RESPONSES The trend to post-Panamax ships is well underway and at some point in the next several years the burgeoning supply of 8,000+ TEU vessels may push vessels of 8,000 TEU or less out of the east-west trades (Alphaliner Newsletter, Volume 2011, No. 34). This displacement is already occurring on the Asia-Europe trades. Ports on the East and Gulf Coasts that wish to have direct service by these efficient 8,000+ TEU container ships must take steps to accommodate them as they arrive from the east from Europe and via the Suez Canal and from the west via the expanded Panama Canal. Accordingly, many of these ports have programs underway to accommodate larger ships. The Port of Virginia, with 50 foot deep channels, no bridge obstructions, terminals equipped with Suez-class cranes, on-dock rail, and double-stack rail service to Chicago, is currently ready for the largest vessels. It will be even more so with the completion of the Craney Island Marine Terminal (Business Facilities, April 1, 2011). A detailed discussion of the development plans of the major East and Gulf Coast ports is beyond the scope of this paper. By way of example, however, the Port of Baltimore has signed an agreement with Ports America to operate the Seagirt Container Terminal and dredge the channel depth to 50 feet by 2014. The Georgia Ports Authority has acquired numerous Super PostPanamax cranes, undertaken the Savannah Harbor Expansion Project, 7


expanded on-terminal rail, and made other investments as part of a $1.2 billion expansion program. The Port Authority of New York and New Jersey is dredging to 50 feet under its Harbor Deepening Program (to be completed by 2014), has committed to raising the Bayonne Bridge to provide air draft clearance for larger container ships, and is improving rail access to the port through its ExpressRail program. Most of the major East Coast and Gulf Coast ports have memoranda of understanding with the ACP to make the

Army Corps of Engineers (USACE) has indicated there are insufficient resources to guarantee the current 45-foot depth of the Mississippi River channel. Houston has secured funding to dredge to 45 feet, and is also building a new container terminal. The USACE and State governments have an important role in infrastructure improvements for US East and Gulf Coast ports, particularly in the area of dredging of channels to accommodate the large ships. Although dredging is

among dredging and other projects. In doing so, it will necessarily have to prioritize projects based on national benefits. Clear tradeoffs will exist from a Federal perspective – the availability of multiple ports able to accommodate the most efficient ships will generate more competition among ports and greater flexibility and lower costs for shippers, whereas the concentration of larger ships in a few ports would lower dredging costs and may create compensating economies of scale to shippers for container handling. State and local

be large and abrupt beginning in 2014. However, as noted, the majority opinion among analysts is that a potential shift of such cargoes would be relatively gradual and even then may not be very large relative to current distribution patterns. This does not mean, however, that the efforts of East and Gulf Coast ports or the ACP to accommodate post-Panamax ships are unwarranted. Although the number and timing of port upgrades must be subject to careful analysis to avoid over-building, the need to accommodate such vessels in

investments necessary to handle larger ships (Rodrigue, p. 34). West Coast ports currently have the channel depth to handle larger container ships. On the East Coast, only Norfolk currently has a 50-foot depth, although New York and Baltimore have work underway to reach this depth. Miami is in the final stages of seeking Federal and State approval to dredge a 52-foot channel. Charleston has plans for 50 feet, but has not yet secured funding. The deepening of the Savannah River has been held up by spoil disposal issues and an environmental study. On the Gulf Coast, the US

well underway for ports such as Baltimore and New York, the recent congressional effort to ban Federal earmarks (traditionally used to fund dredging) has created uncertainty about the ability to fund dredging projects elsewhere, including Savannah, Charleston, Miami, Port Everglades, Jacksonville, and other ports. The ability of State governments to fill in this gap is problematic in most cases due to the major cost of dredging to 50 feet, which can cost several hundred million dollars or more. Without earmarking, USACE will likely be tasked with making discretionary decisions

interests will typically favor local port investments, particularly if Federal funds are available to cover significant portions of the cost.

the canal and a sufficient number of ports seems evident for several reasons. If nothing else, the expansion of the Canal to accommodate 5,000+ TEU vessels is central to its ability to maintain its prominent role in world east-west container trades. Given the strong movement of carriers to large container ships, the failure of the Panama Canal to accommodate them after 2014 would have led to shifts toward greater reliance on Suez Canal routings from Asia to the East and Gulf Coasts and transpacific West Coast land bridge routes, with new port capacity in

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East and Gulf Coast Port Capacity Needs Not Contingent on Capture of West Coast Cargo Much of the interest about the impact of the Panama Canal expansion on East and Gulf Coast ports has been focused on potential transfers of container traffic shares from West Coast ports. Implicit in the attention given to this subject is that the impact of the expansion could

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2012 Issue II


Canada and Mexico supplementing improvements by the US West Coast ports. The ACP acknowledged this when it wrote, “If the Canal wants to maintain its present competitiveness in the presence of the advantage already offered by the Suez route, it will have to acquire the capacity to handle, within a relatively short time, growing trade volumes to be transported in post-Panamax vessels through the Panama route” (ACP, p. 29). The ability of East and Gulf Coast ports to accommodate these larger ships will be significant in maintaining their current east-west

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container traffic shares, particularly if Caribbean transshipment/feeder options are unattractive to some carriers. Drewry reports that, “Now that the Suez Canal and the US East Coast ports are actively marketing an all-water route from Southeast Asia, costs are coming down here too… Hong Kong cargoes would do better moving westbound via Suez instead of across the [Pacific], whereas the dividing line used to be at Singapore” (Drewry, p.13). Suez routings also provide more intermediate cargo opportunities for

large, cargo-hungry container ships. Finally, as noted earlier, the ongoing shift of the world manufacturing centroid from Northeastern Asia to Southeast and South Asia will push more of world manufacturing to Suez routings. Kevin Knight proposes that this shift might favor ports in the Northeast US as a first port of call (Knight, p. 11). Gulf Coast ports would also receive this traffic. Continuing reductions in the polar ice cap could also lead to Arctic routings of vessels from the Far East to East Coast ports. Participants in the Global Shipping Game concluded that changes in trade patterns would occur gradually and “trans-Arctic shipping is not expected to be commercially viable until after 2035 since the seasonal nature of shipping routes limits the effectiveness as a global trade route for tankers and container traffic” (Naval War College, p. 28). Preparation for these changes by industries and governments would similarly require long lead times, although the process could be accelerated by technological breakthroughs and the development of resource extraction industries. On the other hand, some sources are optimistic that limited, seasonal shipping may start up much sooner.

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Finally, the role of Gulf and East Coast ports in Panama Canal trades is by no means limited to container ship traffic. As one source notes, “The primary benefit of the canal project will be to facilitate intra-American trade, providing greater access for west coast Latin American energy commodities to reach the Gulf of Mexico, and east coast Latin American energy commodities to reach the US Pacific seaboard. For example, an expanded Panama Canal would cut by 15 days the voyage time from Peru’s Camisea LNG project to the Gulf of Mexico” (OxResearch Daily Brief Service. Oxford: Jul 06, 2009, pg. 1). Similarly, the ability of the new set of locks to allow bulk ships to transit the Canal more quickly and move much larger vessels (including smaller Cape size bulkers) may prove significant to exporters’ decisions to ship grain from Gulf Coast ports (Baird et al., p. 7). Rodrigue and Drewry both note that a higher share of world manufacturing might be done in the Americas as the labor cost advantages of off-shoring manufacturing erode relative to the higher cost of transportation from Asia (Rodrigue, p. 16 and Drewry, p. 13). If this occurs, a greater emphasis on north-south trading

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in the Americas could eventually enable larger vessels that will need the expanded Canal capacity and deeper draft ports, particularly on the Gulf Coast.

CONCLUSIONS The purpose of this article has been to consider the potential impacts of the Panama Canal expansion on foreign trade shipping patterns in the United States, with particular emphasis on the possible shifting of Asian cargoes from the US West Coast ports to East and Gulf Coast ports. While referencing research currently underway at the US Department of Transportation, it relies heavily on recent academic and industry publications. The literature reveals considerable uncertainty about many factors, including: • rate and service responses of the West Coast ports and western railroads to new competition from allwater services to the east; • the amount of cost savings from operating larger ships through the Panama Canal and the degree to which these cost savings are passed on to shippers by carriers, the ACP, and port operators; • the effects of slow steaming on cargo inventory costs;

2012 Issue II

• the potential use of Caribbean transshipment/feeder services in place of direct service to US ports; • the results of efforts by US West Coast ports to rectify past reliability problems; • the use of new port capacity in Canada and Mexico; • the readiness of East and Gulf Coast ports to handle very large ships; and • other factors such as changes in fuel costs and manufacturing centers. The impacts of any and all of these factors complicate the assessment of future routing responses. The proprietary nature of much of the cost data underlying these factors adds to this complexity. Accordingly, there is a fairly broad range of expert opinions on the overall impact of the Panama Canal expansion. Some analysts foresee a substantial switching of service from West Coast to East and Gulf Coast ports; others expect a much more marginal impact, with some encroachment of Asian containers moved via the Panama Canal to East and Gulf Coast ports into US inland locations already in play between the coastal ports. The preponderance of opinion is that the effect on trading patterns is likely to be gradual, spreading out

over a decade following the opening of the new locks, rather than abrupt. The trend toward the use of post-Panamax container ships on East-West trades is solidly underway. Operating cost advantages of these larger ships are putting pressure on smaller vessels, particularly existing Panamax container ships, but even on post-Panamax vessels of less than 8,000 TEU. It is very likely that the economies of vessel size would greatly reduce the role of the Panama Canal in east-west trading if the Canal expansion had not been pursued. Similarly, whether these large vessels arrive via the Suez Canal or the Panama Canal, East and Gulf Coast ports that intend to receive direct service by these efficient vessels must be able to accommodate them. The question of where and how to invest scarce public resources to support the US ports’ capacity expansion plans remains only partially resolved. With the ending of congressional earmarking, however, pressure will grow on US federal and state agencies, local governments, port authorities, carriers, railroads, and other private entities to coordinate plans to accommodate the inevitable shift to these larger vessels in a manner that generates the greatest net benefit to the nation. IP

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THE AUTHORS Randolph R. Resor is a Policy Advisor in the USDOT Office of the Secretary of Transportation in Washington, DC. Email randolph.resor@dot.gov. Eric Gabler is an Economist for the US Maritime Administration in Washington, DC. You can reach him at eric.gabler@dot.gov. The opinions presented here are those of the authors, not necessarily those of USDOT, and should not be construed to indicate the conclusions of the Maritime Administration’s Panama Canal Expansion study, which is still underway. Printed with permission of the PIANC Smart Rivers Conference. The next Smart Rivers Conference will be held in 2013 in Belgium and The Netherlands. For more, visit www.pianc.us.

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Smart Business

Mexico’s Interoceanic Highway to Compete with Panama Canal and Extend Inland Waterway Hinterland By Joseph P. Linck, Jr.

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or Mexico, and now China, the beginning of the USA inland waterway system is at Brownsville, Texas, just East of the Pacific ocean port of Mazatlan, Mexico. Use of this route, however, has always required a death-defying trip across the Devil’s Backbone – an infamous and very nasty mountain road previously unsuited for commercial use. The enormous and rugged Sierra Madre mountains in Western Mexico have always been insurmountable obstacles, dividing Mexico’s Pacific ports from Texas, and the USA. Not anymore. An incredible new bridge, named Baluarte, the highest in North America, has finally connected Mexico’s Pacific coast to Texas, via this modern super highway called the Interoceanic Highway. This major undertaking is due to open this year, and will finally connect the Pacific ports of Mazatlan, Manzanillo, and Lazaro Cardenas to Brownsville, and the USA‘s inland waterway system. You can check out this incredibly high bridge on YouTube. Unlike in the USA, Mexico’s massive highway trucks routinely carry 40 tons of cargo (twice as much as in the USA), and are the primary transportation vehicle in the country, easily competing with rail. These fully-loaded trucks can enter the USA at Brownsville via the port’s state-approved overweight truck corridor, and load and unload cargos. The USA’s inland waterway will be able to attract heavy containers with 40 tons of cargo from China, and deliver them to the East coast of the USA at Pittsburgh, via Brownsville. A container can be loaded in China with 40 tons of cargo and shipped to Mazatlan. There it can be placed on a truck chassis and moved to the river barges in Brownsville in a day. From Brownsville, that same container, with 40 tons of cargo, can be moved to Pittsburgh at a tremendous freight savings – two for the price of one. A container moving from China to USA ports must be short-loaded with 12

only 20 tons in China, in order to comply with weight limits on USA highways. Another big logistical advantage for this new trade route is that the Mexican port of Mazatlan is located on the Tropic of Cancer, some 1500 miles North of the Panama Canal. Brownsville is located just North of the Tropic of Cancer, as is most of China. Consequently, ships can save 3,000 miles of southern deviation, plus the delays and fees at the Canal. In addition, Panama is located far to the East. It‘s due south of Miami, a full 1,000 miles East of Brownsville. For the Texas/China trade, that means a total of 4,000 miles of extra sailing time, perhaps 14 days. A Mexican truck from Mazatlan to Brownsville, will be able to make the trip in a day. The USA’s inland river barges provide the most cost-effective inland transportation mode in existence, connecting Mexico to the USA’s East coast at half the cost of rail, and one-third the cost of trucks. Large new warehouses are already under construction in deep South Texas in preparation for this new Interoceanic Highway and the 2013 Winter’s fresh produce season. It will create a boom in all of South Texas, for Western Mexico’s fresh produce

An incredible new bridge, named Baluarte, the highest in North America, has finally connected Mexico’s Pacific coast to Texas, via this modern super highway called the Interoceanic Highway. This major undertaking is due to open this year, and will finally connect the Pacific ports of Mazatlan, Manzanillo, and Lazaro Cardenas to Brownsville, and the USA‘s inland waterway system. www.inlandportmagazine.com

trade with the USA. The fertile Pacific state of Sinaloa is the winter vegetable garden for much of the USA during the winter months. Their farmers send as many as 20,000 truck loads of fresh produce per month to Nogales, Arizona, their closest USA port of entry. Not any more. This new Interoceanic Highway will shift this trade to the Brownsville area, as it is some 420 trucking miles closer to New York City than remote Nogales. Another problem for Nogales is lack of back hauls for their USA produce trucks. They must deadhead to Nogales empty, as Mexico imports little at Nogales. Their two-way truck trade is dramatically out of balance during the Winter months, and trucks must be brought empty some 559 miles from Los Angeles (or elsewhere). This lack of Mexican southbound cargos at Nogales is reflected in high northbound truck freight rates – much higher than Brownsville’s. Brownsville truckers, on the other hand, stay busy as the closest USA port of entry for the massive consumer market is Mexico City, and less than 200 miles from the industrial powerhouse of Monterrey. For the Sinaloa farmer, Brownsville should become their favorite deepwater port for supplying the smaller ports in the Caribbean, and perhaps even the Eastern side of South America. Not only is the route faster than the Panama Canal southern diversion, but ocean freight rates are cheaper. Smaller ports need smaller cargos on shallower draft vessels common in the Caribbean. Their rates are much more favorable to these destinations from the US Gulf than from the big ships in their own big ports on the Pacific Ocean. For their European customers, the one-day truck trip to Brownsville is faster than the Panama Canal diversion for their timesensitive perishable products. While the fresh produce business will not directly impact river barges, it will impact the cost of trucking to or from Brownsville. That in turn should bring very favorable truck rates for Pacific rim countries to reach the USA Midwest and East from Brownsville. For all Pacific Rim cargos, the route is faster, replacing a 4,000 mile ocean deviation and canal passage with a one-day trip by fast trucks. With this new Interoceanic Highway scheduled for completion soon, it should beat the new Panama Canal’s opening date, now pushed back to December. All USA shippers in the Midwest, or North East, who are dependant on trade with Pacific rim countries, should utilize this new trade route as an alternative to the Panama Canal and the expensive and increasingly congested ports on the USA‘s West Coast. IP THE AUTHOR Joseph P. Linck, Jr., is a retired commodities trader and former Director of the Port of Brownsville. Through his NAFTA Marine Company and periodic email releases, he urges America’s inland waterways industry to capitalize on opportunities with Mexico. Email him at naftamarine@aol.com. 2012 Issue II


Risk and Reward

Protecting Modern Logistics Terminals T

By C. Daniel Negron Vice President, Thomas Miller (Americas) Inc.

2012 Issue II

he inland river system has historically been viewed as a transportation artery with terminals placed at strategic points along its route. These terminals tended to be located at points where they could provide support services to nearby local or regional industries. Twenty-first century requirements have altered this view. Modern shipping requires fully integrated transportation systems that must respond with speed and efficiency to service local, regional and global requirements. Rather than operating as isolated terminals, terminal facilities are increasingly being viewed as components of an integrated system. They might operate as regional logistics centers, inland ports or, at times, even as virtual ports. A regional logistics center positions itself as an essential link to an overall transportation system. It supports producers, shippers and receivers by using an integration of water, rail and air transportation systems to provide its services. An inland port differs slightly, in that it fulfills some of the functions of a deep water port, although it is located on an inland waterway or land-locked site. Among its benefits, it allows time consuming sorting of goods to be performed closer to regional distribution centers and away from congested seaports. It provides value-added services for goods moving through the supply chain, and it facilitates international trade. A virtual port does not operate from a specific location, but rather, it utilizes the internet to facilitate regional domestic and international commerce. It supports import and export operations by utilizing technology to improve the use of transportation systems. It provides users with a single virtual location for all services related to trade, logistics, security and other transportation related activities. As an operation moves from providing a fixedlocation facility to operating as part of an integrated transportation system, its risk of a potential loss increases. This is due in large part to the fact that its services can be performed directly by the operator, or they can be performed by third party providers. When a service is subcontracted, the operator often remains directly liable to his customer for losses often for the full amount. But the services of the underlying provider may be subject to a legal regime that permits him to limit his liability for the same loss. Road and rail operators are subject to Carmack liability, which permits them to limit their liability for cargo losses under certain circumstances. Ocean carriers enjoy a limitation of liability www.inlandportmagazine.com

under the United States Carriage of Goods by Sea Act. The liability of international air operators is limited by the US enactment of the Warsaw Convention. Under certain circumstances, warehouse operators can shift the burden of insuring goods under their possession to the transportation service provider using those facilities to store goods. By using the service of an underlying provider, the operator faces an increased risk of exposure if he is responsible to his customer for a total loss, while his service provider can invoke an applicable statutory limitation. Injuries arising during the transportation of goods pose a significant risk even to an operator who has no contact with a shipment at all. In the United States, an operator who arranges the highway transportation of goods can become liable for a road accident as if he were operating the vehicle himself. A number of significant cases have determined that if an operator fails to determine the efficacy of the transporter to properly perform the transportation function, the operator will be responsible for a resulting injury. Some of these include failure to verify the status of the provider’s operating authorities, his licenses, the currency of his insurance, and other relevant details. Systems must be employed to ensure that these are not overlooked. Regulatory considerations give rise to professional liabilities. Seemingly mundane considerations such as the use of specially treated pallets, specific labeling requirements, specific cargo descriptions, safety, security and other operational procedures are subject to national or local regulations, and require the need for operational scrutiny. A complex logistics operation requires an integrated risk management and insurance program that will protect against the many risks it faces. This begins with an understanding of the entire operation and ends with the development of an insurance program that will protect against those risks. TT Club can assist this process with an insurance program specifically developed for logistics operations. IP

THE AUTHOR C. Daniel Negron is an attorney with more than 20 years of experience in the transportation industry. He is Vice President of Thomas Miller & Co., the managers of TT Club Mutual Insurance Limited, a specialist insurer to ports, terminal and logistics operators. Email him at daniel.negron@ thomasmiller.com. 13


Centerpoint Intermodal Center in Joliet, Illinois.

Toward a 3rd Generation Intermodal Transportation Blueprint for the Nation Intermodal infrastructure development in the United States is at a juncture that could lead to the development of a third generation (3G) of intermodal systems and services. 3G intermodal will arise in response to the widening of the Panama Canal, and will offer a triple-play of intermodal services – truck, rail, and barge. Arno Hart, of RNO Group, examines the need for a 3G intermodal system in the US. Recognizing that intermodal is a broadly used term, this paper is written in the context of the international container port and the intermodal infrastructure and offerings serving it. 14

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ver since the development of the international shipping container, thanks to Malcolm Mclean and other innovators, the development of intermodal infrastructure has, broadly speaking, evolved through two generations of systems and services. These systems were designed in response to international shipping trends and the demand for intermodal services by shippers.

1st Generation Intermodal The first generation of intermodal infrastructure development was in response to McLean’s container box, introduced in the 1950s, and had a heavy focus on the truck’s role. From McLean’s initial product in 1956, which had an initial focus on roll-on/roll-off, and for several decades thereafter, the truck played a dominant role in intermodal transport. And even with the rapid adoption of the rail intermodal function at ports, the truck still played a strong role in draying containers between ports and rail intermodal yards. Markets within a 8-12 hour drive were conveniently served by truck, and more distant 2012 Issue II


BARGES: The Greener Way to Go Inland barges produce less carbon dioxide while moving America’s important cargoes.

Inland barge transportation produces far fewer emissions of carbon dioxide for each ton of cargo moved. Transport by rail emits 39% more CO2, and by truck emits 371% more CO2 compared to barges, according to a recent study by the Texas Transportation Institute.

Waterways Council, Inc. 801 N. Quincy St., Suite 200 | Arlington, Virginia 22203 703-373-2261 | www.waterwayscouncil.org

2012 Issue II

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Growth will depend on the development of terminal infrastructure designed to accommodate the triple-play of intermodal services – barge, rail, and truck.

markets served by rail intermodal, with trucking playing a key drayage role at either end of the trip. As a result, the intermodal infrastructure at and around the port is characteristically truck-oriented, with the role of rail geared to off- or neardock.

2nd Generation Intermodal The second generation of intermodal infrastructure was heavily influenced by the growth in Asian-related trade. Demand for landbridged intermodal services across the north American continent, between the east and west coasts, as well as the industrial heartland, brought on a new generation of intermodal infrastructure systems and services which were heavily focused on the rail intermodal system. The long distances between the West Coast ports and markets in the heartland and along the eastern seaboard made rail 16

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intermodal service very competitive. In addition, the rail intermodal industry became more service oriented and introduced new innovations such as double-stacking and time-definite scheduled services. And they worked with the respective ports to build on-dock rail terminals as well as inland ports to improve efficiencies. As a result, port related intermodal infrastructure development placed a heavy emphasis on moving the containers through the port as quickly and efficiently as possible, relying on both trucks and rail. In summary, first generation intermodal is characteristically mode single. Second generation intermodal is largely dual mode, specifically truck and rail.

The Intermodal Policy Dilemma The demand for Asian trade has made publiclydriven intermodal policies a 2012 Issue II


success. The significance of Asian trade densities and the operational dynamics of long-haul intermodal trips across the North American continent have largely been responsible for the dominant and profitable role of intermodal in the rail industry’s business model. However, with the widening of the Panama Canal, the economics of allwater services to the East Coast are likely to become more viable. As a result, a portion of existing ships calling at West Coast ports, as well as a portion of future growth in trade, may be diverted to the East Coast. This will deal a blow to current intermodal policy in the sense that an increasing share of Asian trade will be handled by ports which are predominantly served by truck. While West Coast ports have a strong rail intermodal mode share, East Coast ports do not – they are largely truck ports. Their markets are in close proximity and are ideal for truck service. Distances-to-market are too short to make rail intermodal viable, at least to date. The result is that intermodal policy is likely to take a step back, unless it shifts into a third generational mode.

containers to and from Asia, except on a smaller scale. Instead of calling on West Coast ports, containers are shipped through the Panama Canal to the East Coast and then shipped by rail or truck to points west. The challenge is in the cost competitiveness of the rail reverse mini landbridge, given the close proximity of the markets to the ports. Without a 3G intermodal system that is focused on introducing these two key initiatives, it is likely that intermodal mode share will shift back toward trucks.

The Panama Canal Window The widening of the Panama Canal presents a unique window within which to target a 3G intermodal development strategy. The likely repositioning of trade lanes and load centers as a result of the canal’s widening presents that best case for developing 3G intermodal systems that offer a triple-play of intermodal services. Moreover, the strategies and investments currently in place will remain for decades, so the cost of missing this window of opportunity is significant. There will not be as major a development in the industry for the foreseeable future. The

time to put 3G intermodal into place is now.

The Third Generation of Intermodal Policy To date there are very few coastal container load centers that will support the development of 3G intermodal. The public policy debate around the success of container-on-barge and short-haul rail has largely focused on the obvious cost and environmental benefits of the modes, with the skeptics focusing on the cost and operational challenges of the respective services. However, it is critical that the debate be viewed from a broader public policy viewpoint, focused on the evolution of intermodal transportation as opposed to the feasibility of the services themselves. The public policy debate should focus instead on the development of the third generation of infrastructure that is critical to the success of the services.

Policies Towards Marine Highways The intermodal policy debate should focus on policies and funding options that will result in the design and development of coastal load centers connected to major waterways that serve the nation’s

3G Intermodal Development 3G intermodal infrastructure is in response to the widening of the Panama Canal, and will evolve from the growth in triple-play intermodal services (containers on trucks, rail and barge) at container gateway ports. The outcome of 3G intermodal development is largely dependent on the success of two aspects, specifically container-on-barge development (including short-sea-shipping) and short-haul intermodal rail. The former function as “marine highways” serving the nation’s interior from Gulf Coast ports. The latter serve as “reverse mini-landbridges” from East Coast ports to inland markets.

Marine Highways

This refers to the use of inland rivers and waterways (marine highways) to ship containers to and from inland markets. Now more than ever, marine highways offer an opportunity to support a third generation of intermodal terminals and services. They present a unique opportunity for developing container load centers that can offer a triple-play of intermodal services – truck, rail, and barge.

Reverse Mini Rail Landbridges These serve the reverse role of the current trans-continental landbridge for 2012 Issue II

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heartland, specifically container load centers along the Gulf Coast, in close proximity to the base of the Mobile and Mississippi Rivers. Increased focus on new vessel technologies that are more suited for a cargo that cubes out before it weighs out, with a hull design focused less on maximizing displacement and more on speed and agility, and alternative energy configurations including diesel-electric and LNG-electric power-plants.

Policies Toward Reverse Mini-Rail Landbridges Policies and investments should be directed at the development of express

rail services between selected Atlantic ports and the largest inland markets. In addition, innovations should be introduced that are aimed at reducing the cost impediments of short-haul rail intermodal.

The Transportation Geography of Intermodal Development The transportation geography of intermodal development has been distinct and unique within each of the generations. Again, speaking broadly, the truck focused container gateway ports have been a largely East Coast practice, although on-dock rail is a far more common practice of late at East Coast ports.

The truck focus is largely a result of market dynamics. East Coast ports predominantly serve their local markets within a 8-12 hour drive, and hence the heavy role for truck (this is not a rule and there are exceptions). Second generation intermodal development has a had a much larger influence on the West Coast due to the role of Asian trade and the need to serve markets east. As a result, the mode share ratio between West Coast ports and East Coast ports is markedly different. 3G intermodal development will also have a distinct geographic footprint. MARAD’s newly published Marine Highway corridors is a good indication of the potential marine highways geographic footprint. For reverse mini landbridges, the geographic footprint will have a focus on major East Coast container load centers with rapid and direct rail access to major inland markets. The Heartland and Crescent corridors (Norfolk Southern) as well as the Southeast Triangle (CSX) are core examples.

A Strategic Blueprint Forward The public policy path toward 3G intermodal development should concentrate on five core areas: 1. The development of international container load centers within proximity of major inland waterway systems, specifically waterways that lead to large interior markets. 2. The development of terminal infrastructure designed to accommodate a triple-play of intermodal services – intermodal barge, rail and truck. 3. Enhanced mode share policies and incentives that encourage port terminal operators and third party service providers to offer a balanced range of intermodal services. 4. The revision of policies that prevent the development of agile vessel technologies more suited for the higher service demands of the global supply chain. 5. Investment in rail operations and systems which, accelerate the transfer of containers from ship to rail, and reduce the cost of handling. IP

THE AUTHOR Arno Hart, RNO Group, LLC, can be found at www.rnogroup.com. Printed with permission of the PIANC Smart Rivers Conference. The next Smart Rivers Conference will be held in 2013 in Belgium and The Netherlands. For more, visit www.pianc.us. 18

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Protecting Our Inland Waterway System By Michael McQuillan

Vice President Hanson Professional Services Inc.

Inland waterways infrastructure and operational needs have to be addressed from a system-wide view toward 21st century sustainability and transportation relevance. How do we communicate our message, and who will provide the leadership necessary for this challenge? How will the industry generate traction, and do examples exist for modeling such a call to action?

Traditional and emerging markets indicate real potential for increasing freight movements on the Missouri.

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nless all navigable waterway segments and their port connectors are protected from freight losses, the inland marine transportation system will slowly erode, and its place as a valuable public resource will diminish. Without the necessary navigable waterway system-wide support for infrastructure and operations, a relevant transportation system is vulnerable to continued erosion of the “branches” that support the main stem rivers. The branches are similar to the various state and local highway connectors that are necessary to move freight to and from the Interstate Highway System. Highway connectors require system-wide support and maintenance to service supply/demand centers that are not necessarily driven solely by population density. Likewise, the navigation branches begin to erode without supporting maintenance and prolong the perception of water transportation system unreliability and declining service capability. The Missouri River serves as an example of a discrete system “branch” that perpetuated a self-fulfilling decline in service capability. The impacts of an extensive drought and, more recently, too much water, resulted in a perceived negative response to navigation infrastructure and service management support, in the opinion of many users. As freight volume in and out of the system continued to decline, the subsequent reduction of tow frequency and capacity reduced shippers’ economical options. The river’s infrastructure, in the form of ports, terminals, and support services, fell into disrepair. The decline in capabilities to transport freight accelerated a shift to more reliable and expensive forms of transportation service, namely highway and rail. Commodity movements on the Missouri River steadily declined for a period of about eight years until 2010, when freight tonnage experienced its first meaningful growth. The freight uptick and favorable stakeholder response did not occur entirely on its own or as a stroke of luck – an intervention was taking place in Missouri. The Missouri Department of Transportation (MoDOT) demonstrated leadership at a critical time of need for the Missouri River and MoDOT’s effectiveness may have far-reaching, favorable impacts on many of the river’s authorized purposes. In late 2009, MoDOT initiated a stakeholder meeting consisting of more than 200 participants from a multitude of waterway perspectives. The unique diversity of interested parties and stakeholders was astounding. Attendees included shippers, terminal operators, and inland carriers. The presence of local, state, and federal agency representatives and a wide array of political and special interest advocates contributed enormously. Other states were represented at the meeting, primarily by their DOTs. Participation was significant and comprised of river beneficiaries throughout the Missouri River basin, as well as the commercial interests of the greater Port of St. Louis and other Mississippi River ports. The latter stakeholders recognized the importance of the Missouri River’s flow,

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as it supports navigation reliability of the Mississippi River during periods of low water. This illustrates how support for a waterway “branch” and its infrastructure contribute to the viability and sustainability of the overall navigation system.

MoDOT’s Call to Action

on the company’s successful private/public sector marine business experience. Without question, a critical team member was the dedicated stakeholders and their supportive organizations, which was represented by an active Project Coordination Team (PCT). The PCT was engaged throughout the process of reviewing documentation, assessing progress, and directing comments to improve output. Numerous stakeholders contributed individually with-

An outgrowth of this meeting was a stakeholder commitment to support an initiative, coordinated through MoDOT’s Multimodal and Organizational Results staff, to commence a project titled: The Missouri River Freight Corridor Assessment and Development Plan (the study). The objective was to “redevelop the river as a freight corridor with logical market nodes and reliable service that supports a sustainable market and logistics system.” MoDOT identified Missouri River economic four primary purpos- development opportunities exist around facilities with es for the study: multi-modal synergy • Redevelop and expand traditional freight markets; • Identify port infrastructure needs, operations support, and equipment required to initiate, in their areas of interest and support, and expand freight competency and made faciliservices on the river; ties and operations informa• Evaluate potential new tion available when requested. markets and strategies to proRecognizing the value of the mote market expansion; and Missouri River as a part of the • Identify conceptual greater inland waterway sysapproaches to river managetem was paramount. ment that optimize freight A series of well-attended movement on the river. stakeholder working sesThe unique requirements sions explored challenges and of the study necessitated the opportunities as they related to assembly of varied industry five areas of the study’s focus skill sets and specialized deemed most important by the freight modeling capabilistakeholders: ties, including expertise in • Markets and commodities port infrastructure, marine • Infrastructure operations, material handling, • Navigation environmental, water resourc• Operations es, and river management. • Environment MoDOT selected Hanson ProFreight modeling for the fessional Services Inc. (HanMissouri River market was son) to lead this effort based 20

based on a five-state region, with commodities classified and sorted through several levels of criteria, including specific origins and destinations. Potential freight opportunities were subsequently classified as existing or recently watertransported markets and emerging markets. The opportunities were presented based on the nearterm market potential for a shift to water from highway or rail. The identification of freight that could potentially

An assessment of this magnitude had not been undertaken in such detail for nearly a decade. The output was logically grouped and geographically referenced, as well as organized by commodity and purpose, all for ease of use by stakeholders. The information was presented in a GIS map format as well as various tabular formats. The study also focused on issues and recommended efforts necessary for stakeholders to enhance river management and support for navigation sustainability as well as for an environmental discussion.

CONCLUSION

shift to water also highlighted how freight on the Missouri River contributes to the overall inland waterway system freight volume, as most origin/ destination ports are located on other rivers. The results from the study were far-ranging, and they were intended to guide future stakeholder actions toward shared Missouri River freight development success. In addition to the freight analysis, Hanson also completed a marine infrastructure inventory and assessment for the Missouri River segment from approximately Blair, Nebraska, to the Mississippi River near St. Louis, a waterway distance of about 650 miles.

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The continued treatment of our marine highways and the supporting network of ports as discrete “branches” and not as an integrated system places the entire inland water transportation system at risk of a self-fulfilling decline in use. This is reinforced by continued declines in funding the system and withholding the allocation of valuable resources through a “low-use waterway” or “low-use port” rationale. The arguments made for lockage fees for specific users of the system would further erode and undermine system viability. We can ill-afford the risk of such a decline built upon erosion of system branches in exchange for support of only main-stem corridors. The Missouri River is an example of a system branch that has been the recipient of numerous negative impacts affecting its reliability. Every transportation system is susceptible to impacts attributable to weather or natural disasters. This is true for 2012 Issue II


water transportation systems, whether they are deep-draft or shallow-draft networks. It is important to recognize that rapid recovery is vital, and an “all-resource” response is required when these occurrences happen. However, in the Missouri River example presented, sustained challenges, such as drought or flood, may call for support of a different kind to reverse the trend and to regain traction. MoDOT took this challenge, recognizing the river’s importance to Missouri’s commercial and economic development interests. All declining waterway systems need such advocates to initiate reenergizing freight, no matter what the root cause may be. Although MoDOT exhibited unusual leadership and facilitated this strategy for freight recovery in its own interest, the larger lesson is the critical value of the Missouri River to the entire inland waterway system. Freight origins and destinations associated with the study consisted of various locations on the inland system, including the Lower and Upper Mississippi River, Ohio River, Tennessee River, Arkansas River, and along the Gulf Coast. The functions and contributions of freight and water flow bind all “branches” and rivers that make up the overall system. MoDOT and the results of the study it initiated demonstrate that advocacy and leadership can originate locally. The inland transportation network needs more advocates that are supportive of the system and work diligently against deterioration of all vital river segments. From a state perspective, the loss of navigation capability negatively impacts jobs and economic development opportunities. MoDOT’s effort is only one example of what local advocacy can do to protect our inland waterway system. IP

THE AUTHOR Mike McQuillan is a Vice President at Hanson Professional Services Inc., leading business development efforts for Hanson’s Ports & Harbors practice. Mike has 35 years of experience in the maritime industry, and he has worked with virtually all marine business sectors. Mike was Hanson’s Technical Lead for The Missouri River Freight Corridor Assessment and Development Plan, completed for MoDOT. The full MoDOT Study can be accessed at www.modot. mo.gov/services/OR/byDate.htm. Email Mike at mmcquillan@hanson-inc.com. 2012 Issue II

The M70 and M-55 Marine Highway corridors could play a prominent role in relieving OD/OW cargoes from Missouri Interstates.

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Garrison Retires from Arkansas Waterways Commission In this exclusive interview, Keith Garrison talks about what’s behind him, and what’s in front of him Congratulations on your retirement. Was this a sudden decision? I turned 65 last September and thought I’d better leave before people began to wish I already had. Seriously, my health is fine, our first grandchild is on the way this summer, and my 401K has pretty much recovered from the crash. Give us an overview of your career. In my early career I was in TV news, which led to the public relations field and legislative affairs work. As PR director for the Arkansas Farm Bureau, I had worked with a member of the Arkansas Waterways Commission on a river-related project. That acquaintance led to an offer to take this job so, after over 20 years with the Farm Bureau and eligible for early retirement, I immediately went to work here on Jan. 2, 2002. Every career spans high and low points. Do one or two highs stick out for you?

If I had to pick just one it would be a week I spent in Cuba with a small group–we had dinner in the presidential palace with Fidel Castro (from 9 pm to about 4 am). An awe-inspiring moment was when I took my Commissioners to the construction site of the Montgomery Point Lock and Dam (where the McClellan Kerr Arkansas River Navigation System meets the Mississippi River). We stood on dry river bottom inside the towering coffer dam walls holding back the rivers, realizing that we were among the few humans ever to set foot there, past and future–kind of a moon-landing moment. What about a low point or two that you look back on and wonder what might have been? Sure there have been low points and great disappointments. But life isn’t always fair so we play the cards we’re dealt. But in the end, I believe it’s how we deal with adversity and move forward that’s more important

than the “might-have-beens.” For example, I made a couple of major career changes because the future didn’t look too rosy at the time. But moving on presented a whole new set of opportunities, great experiences and new friends which I’d have missed out on, otherwise. Beyond careful analysis of what has transpired in such life events, I don’t believe we should beat ourselves up when things didn’t work out the way we’d hoped. Sometimes circumstances change beyond our control, so it’s up to us to analyze and adjust to our best advantage. I believe we should feel free to strive for a better life for ourselves and our families, but at the same time be thankful for what we do have, especially the non-material blessings of health, family, freedom and security.

awareness, and cultivating political support are crucial, not just for advancing waterborne transportation, but for the industry to survive.

What accomplishments are you most proud of during your time with the Arkansas Waterways Commission? That’s an interesting question because ours is very much a collaborative business. Building and maintaining river navigation infrastructure requires a lot of money, there are a lot of people involved, and when we do accomplish something notable, it was invariably the work of a lot of people pulling together over a long time to get it done. For my part, at times I’ve felt like one of the pioneering astronauts who, when asked what was going through his mind in the moments just before liftoff, replied, “Please Lord, don’t let me screw this up.”

Any words of wisdom you can give the inland port and waterway industry as a whole now, after being on the inside for so long? We are a community small in number and that’s not a “plus” in the political arena from which much of our waterways infrastructure funding must come. We need to leverage our efforts by cultivating the nonwaterways community to understand the extensive economic impact that river commerce can bring to the broader population, and seek their active support. I applaud the active participation by volunteers in the various river associations. They are what connect us all and it has been a great privilege to have met and worked with so many impressive individuals in the waterways community. I have special admiration for the men and women of the Army Corps of Engineers—especially the civilians who volunteered for overseas deployment in Iraq, Afghanistan, and the military members who are soldiers first but so capably assume the Civil Works role. I admire the port operators and managers, the stevedores and boat and barge crews for their cooperative approach and spirit of community. Keep the faith—and know that it’s good work that you do. IP

What is on the horizon for that organization as you step down? Challenges on several levels. Just as it’s difficult to get funding out of the feds for river projects, it’s difficult for a small state agency to get adequate funding and staffing. Arkansas has five commercially navigable rivers, but there is no ongoing plan to help finance the development of river ports, or the state’s cost-share for Corps feasibility studies. Most of your readers know that Corps of Engineers funding for river projects, maintenance and operation are desperately lacking. Creating public 22

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What is on the horizon for you? Do you have other professional ambitions, or is your work life winding up? I haven’t taken more than a week’s time off in the last decade, so I’m going to try actually being retired, for awhile at least. What about personally? How will this change allow you to expand that area of your life? I’ll build my dream workshop, work on my antique MG roadster, play my guitars and trombone more, read more, do some writing, do some traveling, and, as a friend of my advised, just let the days unfold.

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Inland Waterways Course at Texas A&M Galveston An interview with instructor Mike Donelan Tell us a bit about your professional background, and how you ended up at Texas A&M Galveston. I worked in the barge and towing industry for thirty-six years, in operations and sales, starting as a deckhand with a BA degree in American Civilization from Brown. It’s a long story – to make it short I stayed with it, and had a lot of interesting roles and experiences working for great companies like Upper Mississippi Towing, which became Riverway Company, Midland Enterprises, Scott Chotin Inc. and most recently Kirby Inland Marine. Along the way, I earned an MBA from Tulane and became involved in the commercial side of the business. On several occasions I was invited to address the Inland Waterways class at A&M Galveston, and that led to an invitation to teach the class itself. I’m really enjoying it. How would you describe the Maritime Administration Department at the university? How can its offerings help those interested in careers in this field? Is this a major or minor field of study with its own degree plan, or just electives? The Texas A&M Maritime Administration Department grew out of Texas Maritime Academy, which began in 1962 within the Texas A&M system. Often, licensed Merchant Marine officers from that program found jobs on the shore side of the maritime industry, and the maritime administration program was started to offer business courses to cadets. As the university grew, maritime administration became a fully-fledged department offering both undergraduate and graduate degrees as well as a minor in maritime administration for students in other programs. Our students are interested in shore side careers in maritime businesses such as shipping and global logistics. Your undergraduate course on Inland Waterways focuses on the U.S. barge and towing industry. Can you give our readers who might be interested in this more details about course content, goals, etc.? The U.S. inland waterways support a barge and towing industry that is largely invisible to the general public, yet accounts for almost a quarter of all waterborne commerce of the United States by tonnage. That includes both foreign and domestic trades, carried in both U.S. and foreign flag vessels. Most people don’t know how significant an industry it is. The goal is to acquaint our students with the inland towing industry in all 2012 Issue II

respects – history, geography, infrastructure, current operations, cargoes, and markets. We talk about the importance of the towing industry to the economy, in support of industries like agriculture, power generation, petroleum, chemicals, construction and heavy manufacturing. We also put it into context with competing transportation modes like rail and pipeline. It’s pretty open ended. Is it all classroom work, or do you go out on a tug or barge and do some real-world, hands-on work? We try but it’s not easy to do with full-time college students. There is no ready-made textbook for inland waterways, so course material comes from every direction, especially industry sources. We invite guest speakers, especially with vessel operating experience, to broaden our scope. Getting on real boats is a challenge since there are over 50 students in the class and scheduling gets chaotic. We brought some of them to a vessel simulator at an industry training school. That experience was definitely successful. I want to develop more of that.

Don’t ever slow down or get complacent. Having said that, it is not just carriers and logistics companies that hire people with maritime expertise. Their customers do too – the shippers themselves. These include corporations of all sizes and trading concerns, not all of them U.S. based. Ports, terminals and maritime support activities need knowledgeable people. And, there always seems to be opportunity for gifted entrepreneurs.

the rest of the world. For example, the Mississippi River region below Baton Rouge comprises the largest bulk port complex in the world. About half the waterborne cargo tonnage that moves into, out of, through and within that region is domestic commerce, most of it employing shallow draft navigation – meaning inland waterways. The other half is deep draft – ocean shipping, both exports and imports. There is a lot of interaction there.

Are there plans to expand this program’s inland waterways focus in the future? I think we need to develop a better understanding of how the U.S. inland waterways function not just domestically, but as part of our interface with

How do folks go about exploring enrollment? Check us out at www.tamug.edu. There are avenues for military personnel, active mariners and people with prior work experience as well. It’s a very good mix.

Where would students go after completing that course? Are there nextlevel courses along the same lines? Texas A&M Galveston offers a graduate program in Maritime Logistics that is attracting a lot of attention. Many of the undergraduate students are career oriented and want to go to work immediately upon graduation. They are looking for opportunities in all aspects of the maritime industry, which is increasingly seen as a major part of a globally integrated supply chain and logistics structure, still rapidly evolving. There is a lot out there to look at. Those interested in this career would be most interested to hear about job opportunities in specific areas of the industry. Questions like: Are there real opportunities in this field or that? What industry segments offer the most potential for employment. What would you say to them, as far as initial career advice? Finding employment after graduation is a very competitive situation. A student’s work ethic over the long haul is critical in preparing for it. My advice to students is to pull more than your own weight in everything you do, stay informed, and be flexible. There are many exciting opportunities, but not a lot of secure lifetime jobs – the global marketplace continues to evolve, and companies that hire people adjust accordingly. www.inlandportmagazine.com

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AAPA Elects Colombia’s Duarte Chairman

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he American Association of Port Authorities (AAPA)— representing the interests of seaports throughout the Western Hemisphere— elected Armando Duarte-Peláez as its next chairman of the board. Mr. DuartePeláez’s one-year term will begin the last day of AAPA’s 101st Annual Convention in Mobile, Ala., which runs Oct. 21-25, 2012. He will assume the AAPA chairmanship from Jerry Bridges, executive director of the Virginia Port Authority, who began his

one-year term on the last day of AAPA’s 100th Annual Convention in Seattle. “Armando Duarte has been an active and well respected leader in AAPA for many years, dedicated to enhancing Latin American ports’ participation in the association and the sharing of experiences and best practices among hemispheric ports. He will be a strong ambassador for the association and an effective voice conveying the vital role seaports play in economic prosperity, jobs and quality of life,” said Kurt Nagle, AAPA’s president and CEO. For more than 15 years, Mr. Duarte-Peláez has been a shareholder and member of the board of directors of the Santa Marta Port Corporation,

Sociedad Portuaria de Santa Marta (SPSM), in Santa Marta, Colombia. A physicist and electrical engineer by training, Mr. Duarte-Peláez also has a long and distinguished business career in cattle breeding, coal producing and transportation. In addition to SPSM, his port business interests have included a coal port known as PROUERTO, the deepwater port in Barranquilla, Colombia, and various ports along the Magdalena River. In addition to Mr. DuartePeláez becoming AAPA’s chairman-elect, Mr. Adolph N. Ojard, executive director of the Duluth Seaway Port Authority in Minnesota, will serve as the next chairman of AAPA’s United States delegation and serve the association on U.S. advocacy and government relations issues. Mr. Gaétan Boivin, president & CEO of the Trois-

Rivières Port Authority in Québec, will serve as the next chairman of AAPA’s Canadian delegation. In other AAPA news, AAPA representatives emphasized the need for federal support for seaport security and maintenance and improvements to federal navigation channels. Port industry leaders illustrated the challenges that underfunding security and dredging pose for national security and US international competitiveness. As the House Appropriations Committee begins work on the Fiscal Year 2013 budget, AAPA executives reminded Congressional leaders of the critical role that ports play for the nation – serving as a front line of defense on international borders and facilitating overseas trade, 99 percent of which moves by water. IP

Study Shows Barges Superior in Terms of Fatalities, Injuries, and Spills

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he National Waterways Foundation (NWF) released an update of a 2007 study comparing selected societal, environmental, and safety impacts of utilizing inland river barge transportation versus highway and rail transportation. Titled “A Modal Comparison of Freight Transportation Effects on the General Public,” the study was conducted by the Texas Transportation Institute’s Center for Port and Waterways at Texas A&M University. The updated report: • Compares cargo capacity of trucks, trains and inland river barges. One standard 15-barge river tow has the same capacity as 1,050 trucks and 216 rail cars pulled by six locomotives. • Shows that barges can now move a ton of cargo 616 miles with a single gallon of fuel, while trains can travel 476 and trucks 150 ton-miles per gallon. This compares to 576 miles for barge, 413 miles for rail, and 155 miles for truck in 2005 data. • Determines that, for each member of the public injured in a barge accident, 95.3 are injured in rail accidents and 1,609.6 are injured in truck accidents. For fatalities, the rates are 132 trucking fatalities and 18.1 rail fatalities for every barge related fatality. This compares to 2005 data of injury rates of 125.2 in the rail sector and 2,171.5 in the highway sector, and for fatalities, 227 in the rail sector and 155 in the highway sector. Both the rail and trucking industries have improved their injury and fatality rates since the previous study, but both are much higher than the inland waterway industry. To see the full report visit the National Waterways Foundation online at www.nationalwaterwaysfoundation.org. IP 24

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Denso Introduces New Estimating Calculator

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enso North America recently introduced its Product Estimating Calculators to aid customers in the ordering process. With project buyers constantly having to make multiple calls to different distributors to make sure they order the right amount of products to complete their job, it can take a lot of time and money to set things up. Denso North America wanted to help make ordering their corrosion protection products easier, by providing quality estimates on how much products are needed to complete the corrosion prevention job. Their product estimating calculator covers all of its petrolatum and protective outerwraps. Steve Baker, Denso’s Western Regional Sales Manager, says, “We are really excited in helping our customers out and want to make their purchase experience as easy and simple as possible.” IP

Port of New Orleans Board Elects Cahill Chair

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he Board of Commissioners of the Port of New Orleans recently elected Valerie Cahill chair. Cahill succeeds J. Wayne Mumphrey, whose term as chairman expired. Mumphrey will continue to serve on the Board as a commissioner. The Board also elected Commissioners Joseph Toomy vice chair and Daniel F. Packer, Jr., secretarytreasurer. “I am thrilled to be leading the Board of Commissioners during this compelling time in the life of the Port and the New Orleans region,” Ms. Cahill said. “The Port is the region’s number one economic engine, and I will continue to work diligently to fulfill the Board’s goals to create jobs and create new economic opportunities.” Cahill is an independent investmentfinancier and developer. A licensed general contractor, Cahill also earned certification through the International Program of Port Planning and Management. She is one of two commissioners who represent Jefferson Parish on the board. She was appointed to the board by former Governor Kathleeen Blanco in 2007. Cahill has been extensively involved in civic and trade associations throughout the region. She was a member of the board of directors of the World Trade Center and is a member Women’s Professional Council. Cahill is a Fellow of the Loyola Institute of Politics. She is a sustainer in the Junior League of New Orleans. She twice completed the Directors’ College program at Stanford Law School. IP 2012 Issue II

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Industry Notebook Let us spread your message! Email your port, company, or group news to us at djones@inlandportmagazine.com The US Maritime Administration and the US Department of Transportation awarded a $1,068,474 grant from the Small Shipyard Grant Program to The Great Lakes Towing Company and its Shipyard in Cleveland, Ohio. The grant from the Maritime Administration will provide Great Lakes Shipyard, which is operated by The Great Lakes Towing Company, with funds to enhance lighting and purchase a burn table, a scissor lift, welding equipment, scaffolding, air skids, a boom lift, a generator and a self-propelled transporter. In other news, the Great Lakes Towing Company has commenced a major overhaul program for its Great Lakes fleet of 37 harbor assist tugboats. The Illinois is the first of the company’s tugs to undergo this overhaul at the new Cleveland shipyard. The new 770-ton Travelift – the largest on the Great Lakes, second largest in the Western Hemisphere, and the third largest in the world – permits the yard to “dry dock” on land several vessels at a time. The Great Lakes Towing Company operates the largest fleet of tugs on the Great Lakes serving 40 ports and has been in continuous business for 113 years. The Great Lakes Shipyard will deliver another of a series of newly constructed HandySize 3200 HP multi-purpose tugs for a yet undisclosed owner in April. This state-ofthe-art, ice-strengthened tug is also ideal for use on the Great Lakes. Great Lakes Shipyard is now completing the last phase of a major shipyard modernization and expansion program with its designation as the Rolls-Royce Great Lakes Regional Service Center. The new Shipyard is a full-service yard specializing in new construction, repairs, modifications, and steel and aluminum fabrication of all types of vessels and barges. Most recent projects include winter work on McKeil Marine’s tug/barge John Spence and Niagara Spirit, the Shipyard’s first contract with a Canadian tug/barge company; conversion of Interlake Steamship Company’s integrated tug/barge Dorothy Ann and Pathfinder’s Z-drive thrusters from fixed-pitch to controllable pitch; winter work for American Steamship Company’s Buffalo; construction and delivery of a 60-foot workboat for the Port of Milwaukee, Wisconsin; and the simultaneous construction of two 4640 HP state-of-theart ASD tractor tugs for Caribbean Tugz, an affiliate of Seacor Holdings. The Cleveland-Cuyahoga County Port Authority’s Board of Directors recently elected officers to fill one-year terms. The Board re-elected Robert C. Smith, Chair; Marc Krantz, Vice Chair; and Anthony Moore, Secretary. Mr. Smith is entering his fifth year of service on the Board and this marks his second term as Chair. Smith is President and CEO of Spero-Smith Investment Advisers, 26

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Inc., a registered investment advisory firm. Mr. Krantz was appointed to the Port Board in 2009. He is the managing partner of the Kohrman Jackson & Krantz law firm. Mr. Moore has been on the Board four years and was recently re-appointed to an additional four-year term by Mayor Frank Jackson. Mr. Moore is a partner with the law firm of Jones Day. Directors also voted to accept the unaudited 2011 financial results. Brent Leslie, Chief Financial Officer, noted that operating revenues increased by 22% while operating expenses increased by only 3% compared to 2010. The Cleveland-Cuyahoga County Port Authority posted a 10 percent increase in international cargo during the 2011 navigation season, earning it the prestigious Robert J. Lewis Pacesetter Award from the Saint Lawrence Seaway Development Corporation (SLSDC), an agency of the U.S. Department of Transportation. SLSDC Administrator Terry Johnson presented the award to Cleveland-Cuyahoga County Port Authority President and CEO Will Friedman at an event hosted by the Greater Cleveland Partnership (GCP). During the 2011 navigation season, the Port of Cleveland shipped 302,047 metric tons (mt) of cargo through the Seaway, a 10 percent increase over the 2010 season, earning the port its 10th Pacesetter award. In 2011, the Port of Cleveland achieved an 81 percent growth in project cargo mostly attributed to its handling of windmill components, machinery and generators, and automotive presses. This was the first year the port has handled windmill component cargo. This cargo originated in Germany and was destined for Euclid, Ohio. Joe Roman, President & CEO of the GCP said, “The Port of Cleveland is clearly one of Ohio’s economic engines and we are fortunate that Will Friedman is leading the organization. We’re proud to be a partner and supporter; our congratulations to Will, his Board of Directors and staff.” The Port of Cleveland is constructing more than one mile of new railroad track on the port, which will be operated by the Cleveland Commercial Railroad under an innovative public-private partnership arrangement. This is the port’s largest infrastructure project in more than 10 years, which will enable important intermodal connections for customers’ supply chains. The port is also pursuing new services including a cross-lake ferry and a container feeder service. The Saint Lawrence Seaway Development Corp. (SLSDC) recently named the Port of Indiana-Burns Harbor a recipient of the prestigious Robert J. Lewis Pacesetter Award for the 2011 navigation season. The port has earned this award nine times, 2012 Issue II


previously winning in 1992, 1993, 1994, 1999, 2001, 2002, 2006 and 2010. “We are proud to receive this honor for the second year in a row,” said Ports of Indiana CEO Rich Cooper. “More than two million tons of cargo were shipped through the port last year, which was our highest total since 2006. We’ve been extremely fortunate to see a steady growth in shipments during this time of economic uncertainty. We’re now starting to see more investments by port companies in business expansion projects, which we believe is an indication that the economy is indeed improving.” In 2011, the Port of Indiana-Burns Harbor posted an increase of 5 percent in cargo tonnage shipped through the Seaway compared to 2010, and a 10 percent increase in overall shipments, which also included lake vessels and river barges. Port cargoes which had the highest percent increase included limestone (23%), steel (18%), fertilizer (61%), coal (44%) and salt (18%). “The strong numbers realized last year by these Great Lakes ports represents a positive snapshot of the upward turn in U.S. trade as a good direction for the overall economy,” said U.S. Secretary of Transportation Ray LaHood. “Congratulations to the four ports on their robust shipping season and we look forward to another banner year for the Great Lakes St. Lawrence Seaway System.” The Pacesetter Awards will be presented to each of the winners by SLSDC Administrator Collister Johnson, Jr. in the coming months. Johnson said, “The gains made in international cargo shipments last year bode well for the entire Great Lakes St. Lawrence Seaway System and indicate the key role that shipping continues to play in the overall economic recovery. All four of these ports have been past winners of the award since its inception in 1992 and we are pleased to recognize their outstanding performance again this year.”

would astound most people in the outside world. Using angles, light, perspective and composition, SCI invites maritime industry employees to snap photos that depict a normal object—like a propeller, railing or wrench—in a unique and unusual way. SCI seeks photos that superbly capture the “extraordinary” in maritime workplace environments. A panel of distinguished photographers judges contest entries: Gregory Thorp, winner of the James V. Swift Award for maritime photography; John Guider, renowned maritime photographer and creator of The River Inside; and Leo Sorel, New York City-based photojournalist and freelance photographer. One Grand Prize Winner will receive a just-released iPad (Wi-Fi 16 GB) and a copy of The River Inside. SCI will feature the winning photo, along with the additional top seven entries, on its website throughout the month of May. An Insider’s View accepts up to five entries from any current or retired maritime industry employee until May 15, 2012. Photographers submit photos via SCI’s Photo Contest Flickr Group at http://smschur.ch/marinerphotocontest where entrants can find a complete list of rules. Download a PDF of contest rules, including instructions for uploading photos at http://smschur.ch/insidersviewrules.

The largest import steel shipment handled at the Port of Mobile recently commenced operations at the Alabama State Port Authority’s Pinto Terminal. The MV SHI DAI 20 arrived in port at a surveyed draft of 42.3 feet carrying 4,259 carbon steel slabs weighing in at 94,210.244 metric tons (MT). Jimmy Lyons, director and chief executive officer for the Port Authority, noted, “As anticipated, our Pinto Terminal volumes are skyrocketing as the ThyssenKrupp rolling mill continues to ramp production. We’ve long known this mill and its markets would impact this port in a number of positive ways, now, investments serving steel are starting to bear fruit.” The Port Authority, in two short years, has moved the meter on total steel product volumes handled from just over 1.1 million short tons in CY2010 to 3.6 million short tons in CY2011. Roughly two-thirds of that volume represented inbound carbon steel slab bound for ThyssenKrupp. Built in 2012, the MV SHI DAI 20 is an 115,663 dead weight tons (DWT) vessel measuring 833 ft. in length overall (LOA) and has a beam of 142 ft. The vessel is chartered and operated by Ultrabulk and Page & Jones served as the customs broker and vessel agent. The Alabama State Port Authority serves as the terminal operator discharging 25,000 MT of carbon slab per day. The offloading operations are expected to take approximately four days with forty plus percent discharged direct to barge.

The USACE Institute for Water Resources (IWR) released its working draft report examining options for future modernization for U.S. port and inland waterways. In its Conference Report on the Consolidated Appropriations Act of 2012 (H.R. 2055), Congress instructed IWR to report to Congress on how it should address the critical need for additional port and inland waterway modernization to accommodate post-Panamax vessels. Because of the broad stakeholder interest in these options, IWR is committed to conducting its investigation and communicating the findings in a transparent and accessible manner. Congress asked that the report consider: costs associated with deepening and widening deep-draft harbors; the ability of the waterways and ports to enhance the nation’s export initiatives benefitting the agricultural and manufacturing sectors; the current and projected population trends that distinguish regional ports and ports that are immediately adjacent to population centers; the availability of inland intermodal access; and environmental impacts resulting from the modernization of inland waterways and deep-draft ports. This early draft of the report has components that are still in progress. It includes a draft executive summary to show stakeholders the direction the report authors are taking based on research to date. It incorporates information from activities and outreach efforts that were already underway and begins to incorporate feedback from discussions held through listening sessions and other venues over the last few weeks. The draft report considers the perspectives of shippers, carriers, ports, environmental interests, state and Federal agencies, and other interested parties as well as taking a national view. The preliminary report continues development and will ultimately be reviewed by USACE Headquarters and the Executive Branch prior to being transmitted to Congress in June 2012. The study team is headed by Technical Director Keith Hofseth, Study Manager Kevin Knight, and Communications and Public Engagement Lead Hal Cardwell, all of IWR.

The Seamen’s Church Institute (SCI) is calling for submissions to a new maritime photography contest called An Insider’s View. During the two-month submission period, the Institute asks maritime industry employees to show off “art in everyday life,” something in the maritime workplace that people outside the industry might never see. A panel of three esteemed photographers will examine the entries, and the photographer of the image chosen as the Grand Prize Winner will receive a brand new iPad. The maritime workplace contains beauty few ever see—huge, powerful vessels transiting vast waterways and oceans transporting unimaginable amounts of goods. The objects used and seen every day by working mariners

SEKO opened a new facility in El Paso, Texas. SEKO El Paso provides full-service logistics offerings with a niche in the Maquiladora Industry on the US/Mexico border. “I have worked in the manufacturing industry in Mexico for many years and have a clear understanding of our customers’ requirements.” States Jose (Joe) Garcia, SEKO Strategic Partner. “SEKO’s ability to handle all services related to the supply chain is a tremendous benefit to our customers.” SEKO El Paso is strategically located five miles from the US-Mexico Ysleta-Zaragoza Bridge and eleven (11) miles from the Bridge of the Americas. The 100,000 sq. ft. facility’s address is 8600 Gateway Blvd, East, Suite

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204 Dock Door #10, El Paso, Texas 77907. Phone: 956.621.0307. Enrique Darwich, Manager SEKO – El Paso, has 10 years of distribution and transportation analysis experience, a full understanding of the Maquiladora industry, is a Kaisen leader and holds a green belt in Six Sigma. Enrique can be reached at Enrique.darwich@sekologistics.com. SEKO continues to expand in direct response to increased customer requirements for integrated logistics services across the globe. The company’s strategic partner business model is based on creating a collaborative network of independent contractors that have local business, cultural and regional expertise, and applying to their businesses the best practices of SEKO’s organizational structure, IT systems and overall resources. The result provides clients with a seamless, global logistics network. Waterways Council, Inc. (WCI) recently supported Congressman Ed Whitfield of Kentucky (R-KY), along with cosponsors Rep. Jerry Costello (D-IL), Rep. John Duncan (R-TN), Rep. Tim Johnson (R-IL), Rep. Robert Alderholt (R-AL), Rep. Terri Sewell (D-AL) and Rep. Russ Carnahan (D-MO) for their vision and leadership in introducing a bill (H.R. 4342) to modernize the lock and dam infrastructure on the inland waterways system. Known as “Waterways are Vital for the Economy, Energy, Efficiency, and Environment Act of 2012” (or WAVE4), this legislation incorporates the elements of the Inland Waterways Capital Development Plan. The bill will address the critical needs of the inland waterways system, create American jobs, enable growth in U.S. exports, and continue to fuel multiple economic benefits that our waterways generate. The Capital Development Plan applies objective criteria to prioritize essential construction and major rehabilitation projects, revises current beneficiaries’ cost-sharing for these projects, reforms the Corps of Engineers’

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internal project delivery process, and suggests a revenue enhancement – a 30 to 45% increase in the existing diesel fuel user fee the navigation industry pays – to fund vital infrastructure investments that return so much to the American economy and to consumers. “We thank Congressmen Whitfield, Costello, Duncan, Johnson, Alderholt, Sewell and Carnahan for their strong leadership in addressing the critical needs of the inland waterways system. The present business model for modernizing our lock and dam infrastructure is broken, with too few lock and dam projects being built on time and on budget. Recognizing the failings in the current system, this WAVE4 legislation will modernize our essential inland navigation infrastructure and in so doing will benefit the U.S. agricultural sector, our construction industry, our energy sector, our environment, our economy, and all the beneficiaries of the waterways system,” said WCI President/CEO Michael J. Toohey. Waterways Council, Inc. is the national public policy organization advocating a modern and well-maintained national system of ports and inland waterways. The group is supported by waterways carriers, shippers, port authorities, shipping associations and waterways advocacy groups from all regions of the country. Visit www. waterwayscouncil.org. I’s a golden anniversary for Liebherr-Werk Nenzing. The crane manufacturer is delivering its 1,000th Mobile Harbor Crane to Montoir Bulk Terminal in France. Liebherr relies on 38 years of experience in the mobile harbour crane business. In 1974, when Liebherr entered the market, demand for mobile harbor cranes was small. After 20 years of moderate but constant business, Liebherr accomplished their 100th LHM delivery in 1994. The same year marked a significant turnaround, with annual deliveries being double-digit for the first time. In 1996, the type LHM 400 was launched, which is to date the bestselling LHM model. Due to an impressive 250 deliveries, this model accounts for about one quarter of all LHMs ever supplied. Its successor, type LHM 420, has been introduced into the market in 2011 and can be equipped with Liebherr’s state-of-the-art Pactronic hybrid drive system. Remarkable is the exponential increase in demand. While it was taking 31 years to sell the first 500 Liebherr Mobile Harbour Cranes, the other 500 have been accomplished in less than seven years. This is testament to the enduring increase in demand for flexible cargo handling solutions. The St. Lawrence Seaway Management Corporation (SLSMC) predicted that cargo shipments would rise by about three percent to 38.6 million tons for 2012 as it marked the official opening of its 54th navigation season at Lock 3 of the Welland Canal. Exports of coal are expected to be a bright spot, as producers in Montana route their product by rail to Great Lakes ports, where the cargo is loaded onto lakers and brought to the Port of Quebec via the Seaway. The coal is subsequently trans-shipped to ocean vessels destined for Europe, avoiding congested coastal ports. Rob Bryson, from Parrish and Heimbecker’s Hamilton operation, and Donald Gallienne, from Aluminerie Alouette, served as keynote speakers at the event. Canadian agribusiness firm Parrish and Heimbecker, has invested $30 million in expanding its grain handling facilities strategically located at the Port of Hamilton, testifying to the enduring value of the Seaway in cost effectively moving grain. Aluminerie Alouette, the largest aluminum smelter in North America, uses the Seaway to transport substantial volumes of aluminum ingots on a tug / barge combination from its facility in Sept-Iles (Quebec) to Great Lakes ports in the U.S. Both speakers testified to the critical role that marine transportation plays in their respective firms’ ability to compete effectively in a global marketplace. Lifting Gear Hire Corporation was recently chosen to participate in an episode of the “Today in America” television show. The television show portrays the era of www.inlandportmagazine.com

changing economic times, while combining business news stories, lifestyle features and in-depth interviews across various industries. The episode is titled “Innovations in Material Handling to Meet Today’s Industry Challenges.” The filming took place at LGH’s corporate office and warehouse in Bridgeview, IL. A portion of the episode explores how industry leaders are turning to rental equipment for a guarantee of safety and reliability. “Safety and the reliability of equipment is a priority here at LGH. To ensure we are providing the highest quality of equipment to our rental customers, each piece of equipment is tested and certified to ANSI standards before it is taken out by a customer,” said Thomas Beasley, Business Support Manager at LGH. When completed, the television show will air in fifteen different cities during the summer of 2012. Founded in 1990, Lifting Gear Hire Corporation (LGH) is the United States’ largest single organization devoted exclusively to the provision of lifting and moving equipment for rent and sale. LGH provides hoisting, pulling, jacking, rigging, material handling and safety equipment available for immediate and safe use. LGH – Puts Safety First. www.lgh-usa.com Ratner Steel Supply recently announced plans to locate a new facility at the Port of Indiana, creating up to 30 new jobs by 2015. The Roseville, Minn.-based company, which produces steel sheets and plates, will invest $14.25 million to build and equip a 102,000 square-foot steel service facility located at the Lake Michigan port. Construction on the facility will begin later this month with the facility slated to be operational in early 2013. “Having a Minnesota-based company like Ratner Steel decide to open a facility in Indiana reinforces our magnetic appeal to companies across the Midwest,” said Dan Hasler, Secretary of Commerce and chief executive officer of the Indiana Economic Development Corporation. “More and more companies are finding our pro-business, low-tax environment advantageous to their growth.” Ratner Steel, which currently has 62 full-time employees nationwide, plans to begin hiring new sales, clerical and production associates in October. “While we easily could have opened a facility at any location, Indiana’s business climate provided just the sort of location we were looking for,” said Steve Gottlieb, general manager and chief financial officer of Ratner Steel. “This new facility allows our company unequivocal access to our customers while strategically placing ourselves in a position for future growth.” Founded more than 25 years ago, the company serves customers in the agricultural, fabrication and energy industries throughout the Midwest and Canada. In 2011, Ratner Steel recorded more than $100 million in sales. The Port of Indiana is now home to 30 companies, including 16 steel-related firms, which benefit from the facility’s multi-modal connections, specialized services and foreign-trade zone status. The 600-acre port handled more than 2 million tons of cargo in 2011 via international ships, lake vessels and river barges. “This port is home to the who’s who of steel companies and Ratner Steel is a great addition,” said Rich Cooper, CEO for the Ports of Indiana. “Ratner will not only benefit from synergies with existing port companies but also from being able to access our railroad, highway and waterway connections, which can significantly reduce transportation costs.” The Indiana Economic Development Corporation offered Ratner Steel Supply Co. up to $210,000 in conditional tax credits based on the company’s job creation plans. “Portage is the benefactor of the exceptional work of the IEDC, the Port of Indiana and the Portage Economic Development Corporation,” said Portage Mayor James Snyder. “Like Ratner Steel, anyone looking to bring jobs to Portage can rest assured we have the best team and location to help them call Portage home. We are grateful Ratner Steel has chosen Portage as their expansion location and we believe they are just a start to a strong economic comeback.” IP 2012 Issue II



Inland Port Magazine 2012 Issue 2