The North American Short Sea Shipping Market

The North American Short Sea Shipping Market

Source: Own compilation from the Lake Carriers’ Association and the St. Lawrence Seaway Corporation. Maritime highway paths from US Department of Transportation, Maritime Administration.

In North America, the potential of shortsea shipping is significantly curtailed by markets, policy, and geography. The prominence and efficiency of rail for long distances and trucking for short distances mostly leave short sea shipping niche markets with limited growth potential. Additionally, policy related to trade and customs regulations (advance manifest requirements, cabotage rules, tariffs, and duties) undermine short sea shipping operations. For instance, the Jones Act prevents foreign carriers from carrying containers between American ports. The dominant form of short sea shipping concerns feeder services calling to the East and Gulf Coast ports from Caribbean transshipment hubs (mostly Kingston, Freeport, Cartagena, and Panama). There is an untapped potential considering the configuration of pendulum routes along the coasts (a pendulum route typically calls 2 to 4 ports). If the cabotage rule was amended, it would change some elements of North American freight distribution with a new form of regionalism.

The upper Great Lakes (Erie, Huron, Michigan, and Superior) offer good navigation depths, but navigation is limited by the waterways between the lakes and by ice in winter. Still, they handled about 157 million tons of dry-bulk cargo in 2007. Further, access to the Atlantic is limited to the depth and lock size of the St. Lawrence Seaway (transiting 32 million tons of cargo), which is closed for a few months during the winter. Other short sea shipping services can be considered as marginal but could develop if volume increases and if comparative options for specific services are less attractive. There is a regular service between Seattle and Anchorage to effectively link Alaska and the American mainland, a Gulf Coast service between Tampa, New Orleans, and Houston, and a northeastern seaboard service between Boston, New York, Baltimore, and Norfolk (Columbia Coastal). There is also a river barge service between Hampton Roads to Richmond using the James River. In eastern Canada, another service links Montreal and Halifax to St. John’s (Oceanex).

In 2012 with the Coast Guard and Maritime Transportation Act, the US Department of Transportation (Maritime Administration) began articulating a national maritime highway strategy that focuses on improving the capacity and connectivity of an array of inland waterways that have been dubbed as “maritime highways” to provide an analogy with the Interstate highway system (see above map). For instance, the main maritime corridor along the East Coast is called M-95, as an analogy to the I-95 highway having a similar orientation. The general goal is to expand the array of options available for surface transportation and improve the efficiency of the American transport system. The strategy supports the setting or expansion of short sea and barge services, which is not without challenges. For instance, the New York / Albany barge service along the Hudson (M-97; an initiative that took place before the Maritime Highways strategy) started in April 2003 and was suspended in February 2006 due to the lack of funding, which corresponded to the end of subsidies provided by the Port Authority of New York and New Jersey to help jump-start the service. On the West Coast, a barge service between the Port of Oakland and Stockton (along M-580) was inaugurated in June 2013. However, in September 2014, the weekly service was discontinued. The main issue was that container handling charges at both ports did not make the connection competitive enough with truck services. Therefore, in light of the current characteristics of the North American short sea and inland maritime systems, effectively competing with road and rail freight transportation has so far had limited results.