Common wisdom holds that the container shipping revolution was launched in 1956 when industry pioneer Malcolm Maclean decided to ship domestic trailers from Houston to Port Newark aboard the Ideal X, a converted tanker vessel. The modern US interstate highway system was in its infancy at the time, and trucking delays led this industry innovator to create a more cost-and time efficient “mousetrap”.
In the intervening 62 years both the US interstate highway system and the container shipping industry have arguably both become victims of their own success, particularly when it comes to “last mile” delivery of international and domestic cargo between metropolitan areas and load center ports along the increasingly congested I-95 and I-5 corridors on the East and West coasts of the US. Container shipping volumes across the board in the US are forecasted to increase 50% in the next couple of decades, and while vessel and terminal capacities are increasing apace, the same is not true of the highway system along the coasts. In terms of vessel size, the widening of the Panama Canal and the raising of the Bayonne Bridge between New York and New Jersey now allow for the upsizing to 14,000 TEU vessels calling at US East Coast ports. To put this into perspective, between 2010 and 2015 the average size of container vessels calling at US East Coast ports increased from approx. 5,000 TEUs to 9,000 TEUs. Within the next 3 to 5 years, the average vessel size is predicted to increase again to the 14,000 TEU mark, and these size vessels are already being exceeded on the West Coast. While many East Coast ports have been able to rise to the requisite challenge of terminal and harbor deepening investment, other ports along the coast will likely not be able to accommodate those vessels for the foreseeable future. The additional challenge is that the consolidation of ocean carriers into 3 major alliances means that these alliances will increasingly be serving a limited number of port loops with consistently-sized larger, lower slot-cost vessels.
The consequence is that larger volume surges are occurring at these load center port terminals, however the road systems, particularly along the congested urban coastal corridors are space and capacity constrained. A variety of issues are combining to create a “critical mass” of economic and environmental factors that favor coastal marine container feeder services as opposed to over the road trucking. These include congestion-related trucking delays, toll increases, ELD/driving time restrictions, driver shortages, increased toxic emissions, etc. Certainly, the cost analysis of marine feeder vs. trucking must be analyzed on a case by case basis, including the additional terminal handling on and off container barges at the load center and at the feeder ports, as well as last mile container drayage to and from the barge feeder terminals, but even considering these cost factors, the “Marine Highway” alternative is beginning to look increasingly attractive.
The Marine Highway refers to a system where larger vessels offload containers at a load center seaport and that cargo is transported via a smaller feeder vessel to another coastal or inland waterway seaport. In this way, cargo is using more cost and environmentally efficient means to arrive closer to its destination. The Marine Highway also reduces road congestion between the large seaport and the final market. This system is used extensively in other parts of the world, but has been used fairly lightly in North America. The US Maritime Administration (MARAD) has recently awarded several grants to advance the Marine Highway initiative in several areas:
- Mississippi River, to help expand an already robust export container shipping initiative between Baton Rouge and the Port of New Orleans
- Intra-NY Harbor, to connect Port Newark container traffic with NY East of the Hudson points, as well as evaluation of a domestic marine highway alternative to serve the thriving Hunts Point public fish, produce, and food markets in the Bronx
- Port Newark-Brooklyn-New England container feeder service
We see the dynamics mentioned above to create more efficiencies for some Marine Highway routes – and that will open up a cascading set of growth and economic development opportunities at smaller seaports. Finally, in a real “Back to the Future” development reminiscent of Malcolm MacLean’s 1956 innovation, several parties are seriously evaluating a Ro/Ro trailer marine service connecting Miami with Newark, to compete with long-haul trucking on the I-95 corridor. History does sometimes repeat itself; not always exactly, but in ways that are recognizable to those with a long-term perspective.
GLDPartners is an international investment and advisory firm that specializes in revenue and infrastructure development projects at and around high-opportunity airports, seaports and strategic trade and logistics hubs. The firm supports global manufacturers and companies with retail distribution operations with network design strategy and facility location analytics. GLDPartners’ clients and market perspective is global and the firm is headquartered in Scottsdale, Arizona, with offices in New York, Washington DC, Wisconsin and in the UK.