MarAd: Rising fuel prices boost short sea prospects
Higher oil prices mean container shipping services are likely to become viable on the Great Lakes-St. Lawrence Seaway System and on the Mississippi River and Gulf Coast corridors, says a new Maritime Administration study, Impact of High Oil Prices on Freight Transportation: Modal Shift Potential in Five Corridors.
“Overall, the impact of higher oil prices is to create a strong case for investing in the waterborne transportation industry — for both inland and coastal distribution. Potential increases in oil prices already forecast could increase transport costs two- to eight-fold. Despite the wide range in forecast oil prices, even the minimum forecast is creating a transportation environment more like that of Europe in the 1990s than previous short-term fuel price hikes previously experienced in the United States,” said the study, which was prepared by Transportation Economics & Management Systems.
“As the cost of shipping rises with higher fuel prices, better environmental protection, and rising congestion, the speed of delivery of goods may become less significant in shipping decisions,” the study said. “In addition, institutional policies and regulatory and tax structures can be realigned so that industry is encouraged to make large new investments and to assume the associated risks.” It also suggests that planners should seek to establish local or satellite ports on the East and West coasts.
The report explores the effect of fuel prices on the likely prospects for implementation of short sea shipping on along the East, West and Gulf coasts as well as the Mississippi River and Great Lakes, near to about 90 percent of the U.S. population lives.
Among its findings:
' On the East Coast “there appears to be an immediate potential for developing container feeder services in conjunction with existing international gateway ports and rail intermodal services, for delivering trailers and containers closer to end-use points, particularly given rising corridor road congestion affecting truck service along Interstate 95 from Boston through the Virginia Beach.” It said “arbitrarily limiting the use of such services only to international port traffic restricts their potential and may cause them to fall short of the minimum volume require to economically sustain the service.”
' The West Coast corridor has stronger domestic container traffic potential than the East Coast. A major opportunity has been identified for the development of feeder services from Los Angeles to both San Diego and Oakland. In addition, there appears to be potential for growth in petroleum traffic as fuel prices rise.”
' In a high fuel price environment, the Great Lakes and St, Lawrence Seaway “has the second strongest domestic container traffic potential, next to the Mississippi River corridor,” because of heavy industry and population along the rivers.
' An assessment of prospects for the Gulf Coast found “its demand forecast rises three times as high as fuel prices go up, reflecting diversion of both truck and rail to the more efficient water mode. This Gulf Corridor also stands to gain in bulk traffic, both grain and petroleum, as fuel prices increase, since water-borne shipping is more energy efficient than rail.
' Container on barge operations would be viable on the Mississippi River Corridor and as the most energy efficient mode “shows the strongest response to fuel price with the demand forecast going up nearly four times as fuel prices rise.”
The report said “water and intermodal rail infrastructure at both coastal and inland ports needs to be developed to ensure the optimum distribution of freight through all modes of transportation so that the U.S. transportation network develops in an efficient and integrated manner.”
The report can be viewed at www.marad.dot.gov/documents/Modal_Shift_Study_-_Technical_Report.pdf. ' Chris Dupin