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May16, 2016

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GOVERNMENT WATCH INTERNATIONAL | WASHINGTON | CUSTOMS | SECURITY | REGULATION MAY 16.2016 18 THE JOURNAL OF COMMERCE www.joc.com By Reynolds Hutchins MARINE HIGHWAYS HAVE had a rough go in the United States, but the U.S. Maritime Administration says it's learned from missteps and its new slate of projects can compete with surface transportation while offering shippers new flexibility. Not only do the three proposals on the table today for container transport via inland and coastal waterways have a smaller customer base in mind, but they require less backing from the federal government, Marad officials say. The Department of Transportation in mid-April publicly backed three marine highway project proposals, including a Baton Rouge-New Orleans, an Illinois intra- state and a Lake Erie shuttle. And while there is no guarantee the three projects — each vying against 11 others for a portion of $5 million in federal assistance — will get the green light, the projects' backers say the pro- posals are far more evolved than the marine highways of the past. The projects' designers have identified risks inherent in such endeavors and found ways to minimize those through federal assis- tance without using federal dollars to carry the entire project, Paul "Chip" Jaenichen, Marad administrator, told The Journal of Commerce. The soundness of the new proposals has already attracted the attention of big-name shippers, including Shintech, Dow Chemical, Ford Motor Co. and General Motors. Jaenichen said he knows the failure of the M-580 weekly container-on-barge service in 2014 tarnished the public's and the industry's opinion of the Marine Highways Program. The service between the California ports of Stockton and Oakland was only a year old when it was shut down. The start-up period was longer than anticipated, industry insid- ers said in the aftermath. Many of the roughly 50 shippers that used the service — ranging from agriculture producers to finished goods makers — were unwilling to shift more of the freight to barge without a guarantee of how long the service would last. Marad has remained a champion of the concept behind the DOT-led program to expand the use of the nation's navigable waterways to relieve landside congestion, reduce air emissions and generate other public benefits by increasing the efficiency of shipping via the country's inland and coastal waterways. After the California service ended, Jaenichen said he instructed Scott Davies, director of the America's Marine Highways Program, to perform an autopsy of sorts. What Davies' team discovered, he said, is that the two most important characteris- tics of these projects are the services and the products they move. "We have now factored that in when the new projects come in for designation." According to Jaenichen and Davies, each of the three recently proposed shuttle ser- vices have those key characteristics. Demonstrations have already been per- formed on two of the services, including the Baton Rouge-New Orleans Shuttle and the Lake Erie Shuttle, Davies told the JOC. The Mississippi River will serve as the primary route for the Baton Rouge-New Orleans operation. Sponsored by the Port of New Orleans in partnership with the Port of Greater Baton Rouge and Seacor, the pro- posed container-on-barge service is aimed at reducing congestion and bridge traffic on Louisiana's Interstate 10. Seacor has been working with Shintech, the largest producer of PVC in the U.S., for the past year, demonstrating the feasibility of mov- ing goods between Shintech's Baton Rouge area operations and the Port of New Orleans. Dow Chemical, which has operations in Plaquemine, Louisiana, said it will consider the container-on-barge service for exports of containerized shipments of polyethylene from the plant across the river from Baton Rouge, said Stewart Serpas, supply chain director of packaging and specialty plastics at Dow.. The other service that has already been subject to public demonstration is the Lake Erie Shuttle, a proposed route sponsored by the Port of Monroe that will carry cargo for shippers between the ports of Monroe, Michi- gan; Cleveland, Ohio; and Detroit, Michigan. Detroit's inclusion has made the auto man- ufacturing industry an obvious partner for the service. "For the Lakes-area shuttle, they've got a couple of car companies," Jaenichen said. The third proposed service would oper- ate along the Mississippi from Chicago to New Orleans. The Illinois Interstate Shuttle is structured to shift about 5,500 containers in its first year of operation from the con- gested north-south Interstate 55 to water. Sponsored by America's Central Port located in Granite City, Illinois, the container-on- barge service would provide a new routing option for soybean and grain shippers, according to the DOT. "They see this as an opportunity to get some of the agricultural products down to the Gulf for export," Davies said. JOC Contact Reynolds Hutchins at reynolds.hutchins@ihs.com and follow him on Twitter: @Hutchins_JOC. MARAD BULLISH ON BOX SHUTTLE PLANS Agency says there's less risk, more shipper interest in three new marine highway projects

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