	Background: Recent Federal Support

For at least a decade, policymakers have been discussing the potential to shift freight from roads to rivers and coastal waterways as a means of mitigating highway congestion. While U.S. waterways carry substantial amounts of bulk commodities, such as grain, coal, and fuel oil, they are seldom used to transport containerized cargo between points within the lower 48 states. Trucks, which carry most domestic container shipments, and railroads, which carry a large proportion of containers imported or exported by sea, offer much faster transit. Yet, at a time when many highways and rail lines are congested, a parallel river or coastal waterway may be little used. With passage of the Energy Independence and Security Act of 2007 ( P.L. 1760), Congress pushed for greater use of marine transportation by requiring the Department of Transportation's (DOT's) Maritime Administration (MARAD) to identify waterways that could potentially serve as "short sea" shipping routes. Subsequently, in the National Defense Authorization Act for FY2010 ( P.L. Can Marine Highways Deliver Tangible Benefits? A prevailing perception is that the slow speed of barges and the additional cargo transfer costs at ports deter use of marine highways. However, there are also highly specific conditions under which barges might be an attractive option for container shippers. Truck ferries demonstrate that marine highways can be successful. However, the geography of the contiguous United States presents few opportunities for cross-waterway ferries. Three barge operators compete for this cargo and in combination provide frequent service. In addition, a significant portion of domestic truck freight is carried in truck trailers rather than in containers that can be detached from their chassis. These factors severely limit the potential universe of truck traffic that marine highways could divert from the highways. Reducing cargo handling costs at ports is key to marine highway development. As the above analysis suggests, marine highways may be commercially viable in certain circumstances. In many instances, however, they have succeeded in capturing only a negligible share of container shipments along a given route. There are questions, therefore, whether marine highways will divert enough trucks to provide public benefits commensurate with their costs. Most of the marine highway services that have received federal grants are carrying, or seem likely to carry, no more than a few thousand containers annually. The Harbor Maintenance Tax

Another means of promoting short-sea shipping would be to repeal the existing harbor maintenance tax as it pertains to containerized domestic shipments, although the tax remains largely unenforced with respect to domestic shippers. Since the construction cost of U.S.-flag deepwater cargo ships is generally believed to be three or four times that of ships in the world market, the Jones Act may be a significant barrier to domestic shipping in oceangoing vessels.
Policymakers have been discussing the potential for shifting some freight traffic from roads to river and coastal waterways as a means of mitigating highway congestion. While waterways carry substantial amounts of bulk commodities (e.g., grain and coal), seldom are they used to transport containerized cargo (typically finished goods and manufactured parts) between points within the contiguous United States. Trucks, which carry most of this cargo, and railroads, which carry some of it in combination with trucks, offer much faster transit. Yet, at a time when many urban highways are congested, a parallel river or coastal waterway may be little used.
With passage of the Energy Independence and Security Act of 2007 (P.L. 110-140) and the National Defense Authorization Act for FY2010 (P.L. 111-84), Congress moved this idea forward by requiring the Department of Transportation (DOT) to identify waterways that could potentially serve as "marine highways" and providing grant funding for their development. DOT has selected several marine highways for grant funding totaling about $80 million. To be eligible, a marine highway must be an alternative to a congested highway or railroad and be financially viable in a reasonable time frame.
The prevailing perception is that coastal and river navigation is too slow to attract shippers that utilize trucks and that the additional cargo handling costs at ports negate any potential savings from using waterborne transport. While there are other significant obstacles as well, under highly specific circumstances, marine highways might attract truck freight. Freight corridors characterized by an imbalance in the directional flow of container equipment; shippers with low value, heavy cargoes, and waterside production facilities; and connections with coastal hub ports over medium distances may be suitable for container-on-barge (COB) or coastal shipping services. It also appears that marine highways are more suitable to international rather than domestic shippers because the former have lower service expectations.
A review of the successes and failures of the few marine highway services currently operating in the contiguous United States, as well as those that have failed in the past, indicates that the potential market is limited. In many instances, marine highways have succeeded in capturing only a negligible share of container shipments along a given route. One can question, therefore, whether marine highways will divert enough trucks to provide public benefits commensurate with their costs. Congress may also consider repealing a port use charge, the harbor maintenance tax, for containerized domestic shipments as a means of spurring marine highway development. Repealing the tax raises equity issues because waterway users already benefit from reduced federal user charges compared to trucks, and their other competitor, the railroads, are largely self-financed. The Jones Act is arguably another potential statutory hindrance to marine highway development, particularly coastal highways. This act requires that all domestic shipping be carried in U.S. built ships. Critics claim the act raises the cost of domestic shipping to such a degree that it cannot compete with truck and rail.