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**United States House of Representatives**

**Committee on Transportation & Infrastructure**

**Subcommittee on Coast Guard and Maritime Transportation**

**Honorable Elijah E. Cummings, Chairman**

**Testimony regarding**

**"The Development of Short Sea Shipping in the United States"**

**February 15, 2007**

**Submitted by**

**Stephen P. Flott**

**Chairman, SeaBridge Inc.**

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Good Morning, Mr. Chairman and Members of the Subcommittee. Thank you
very much for giving me the opportunity to appear before you today to
testify regarding the development of Short Sea Shipping in the United
States.

As you will no doubt learn from these hearings and from further study,
there are many quite different types of waterborne transport services
included under the banner of "short sea shipping". Indeed, it should not
be overlooked that short sea shipping exists in the United States today
and moves significant quantities of goods along our coasts and through
our inland waterways. That said, it has also become abundantly clear
that we must find ways to increase substantially the ability of our
coastal oceans and inland waterways to add badly needed capacity to our
national transportation network.

SeaBridge Inc. is pursuing a unique short sea shipping vision -- unique,
that is, for the United States. It has developed and proposes to
introduce high speed, scheduled, long haul roll-on/roll-off freight and
passenger ferry services between major population centers along the East
and Gulf Coasts, using an innovative vessel design and state-of-the-art
port facilities.

An immense market for passenger and freight -- commonly referred to as
"ro-pax" -- ferry services exists throughout much of the world. In
Europe over 450 million passengers, 100 million cars, and 22 million
trucks were transported on ferries in 2005. Successful private companies
have proven that matching service offerings to customer needs is
profitable across a range of markets.

The important drivers of high European ferry demand -- congested roads,
high fuel prices, tolls and road taxes, hours of service limitations for
truck drivers, driver shortages and increasing highway safety concerns
-- exist in the U.S. today. The principal difference between existing
ro-pax ferry operations in Europe and prospective ro-pax ferry services
in the U.S. is that here such services have to compete directly with the
highway system because virtually all freight and people moving in the
continental United States can reach their destinations without, save for
a bridge or tunnel, crossing any body of water. An example of marine
service offering an alternative to land based connections exists between
the states of Washington and Alaska, where marine operators provide a
water alternative to the highway corridor through Canada.

The SeaBridge vision is to create a marine highway network in the United
States capable of adding new "lanes" to two of the Nation's most
congested traffic corridors, complementing and supplementing existing
transport infrastructure along I-95 and I-10. At this point in of the
Committee's study of the potential for short sea shipping, it is
important to distinguish among the types of coastal ferry services that
we and other operators envision.

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One may ask what motivated SeaBridge to invest six years and close to
\$4 million to pursue and develop an advanced vessel design capable of
providing freight and passenger services that can draw traffic from
highways.

This next graphic captures the "draw" that we believe will lead motor
carriers and motorists to use our coastal ferry services when they offer
a suitable alternative to other means of transportation. This belief has
been fully vetted and validated through extensive market research. The
attraction of this service is time and money; convenience and
efficiency.

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Unlike rail intermodal service where only the trailer or container is
transported between fixed intermodal ramps to await local pickup or
delivery, SeaBridge's coastal ro-pax service enables the truck or power
unit (which is often owned by the driver and leased to a trucking
company) to accompany the trailer. Hence, the trucker as part of his
journey from origin to destination drives on to the vessel, parks his
vehicle as if at a truck rest stop, and checks into his accommodation on
board the vessel. When the vessel docks at the end of its long haul
"marine highway" movement, the trucker drives off the ship and proceeds
to his final destination. This is a target trucking market that
typically does not use rail services but could and would use marine
highway services.

Rather than use my testimony to describe our marine highways concept in
detail, appended to my testimony is a copy of our proposal to the
Federal Highway Administration's "Corridors of the Future Program" which
provides a more detailed look at of our network. Ours was the only short
sea shipping proposal among the 38 submitted to the FHWA under their
September 5, 2006 Request for Applications.

As the next graphic clearly illustrates, growing highway and rail
congestion and the absence of easily available or affordable land-based
alternatives is a major threat to the health of our economy.

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The challenge of meeting our freight transportation infrastructure needs
cannot be underestimated. Short sea shipping must be viewed in this
context, as a viable and necessary component in the Nation's
transportation infrastructure worthy of equal consideration as the other
surface transportation modes. Indeed, the relative speed with which
marine assets can be deployed compared to the construction of highways
or railways should make short sea shipping alternatives very attractive
in meeting this challenge.

As governments at the Federal and State level struggle to find
cost-effective ways to finance needed new infrastructure capacity, short
sea and coastwise shipping offers commercially viable marine highway
options that will add significant new transport capacity and meet other
national policy priorities, including job creation within the commercial
shipbuilding and maritime services industries. In addition, in the event
of a national or international emergency, this new capacity offers
high-speed, long-range sealift capability for national defense and
homeland security, both of which are top priorities of the U.S.
military. This lift capability also applies to natural disaster response
and recovery efforts to provide alternative evacuation capacity as well
as inbound relief supplies.

When one grasps the implications of the preceding graph, is there any
wonder that there is a growing chorus of increasingly concerned voices
calling for action on what is now generally acknowledged in informed
circles to be an imminent freight and personal mobility crisis? The
crisis is not "news". Its existence and the growing danger it poses to
the economic health of the U.S. has been known for years. The 2003 U.S.
Chamber of Commerce Foundation's Report on Trade and Transportation
concluded that the U.S. intermodal freight system is now being operated
in many areas near the limits of economically sustainable capacity.

In a speech to the U.S. Chamber of Commerce Foundation in June 2003,
Former Secretary of Transportation, Norman Mineta, after observing that
"\[o\]ur landside transportation system is already stressed to the limit
and currently planned infrastructure improvements and expansion cannot
possibly meet this escalating demand," suggested that "\[o\]ne
intermodal alternative is development of a robust short sea shipping
system that would aid in the reduction of growing freight congestion on
our nation's rail and highway systems."

The performance of our surface transportation system has been
deteriorating at an accelerating pace over the past decade. The ability
of our land and water transportation infrastructure to support our
economic growth, international trade and global competitiveness is a
major economic and political challenge that has to be addressed as a
matter of utmost urgency. Addressing the causes of this deterioration is
not an insignificant financial challenge either.

Adding capacity to our road and rail networks is expensive, politically
and environmentally sensitive, and requires long-term advance planning.
The oft-quoted estimated cost of adding lanes to existing highways or
building new ones is an average \$32 million per lane mile. The cost
does not include delays associated with overcoming public resistance. In
many sectors along the I-95 and I-10 corridors, highway expansion,
particularly in and around urban areas, is no longer an option even if
money were available. Intelligent transportation systems can produce a
little more capacity on existing highways and technology can improve
rail efficiency, but neither can add more than marginal capacity to the
system.

Additionally, the fragility of current transportation infrastructure
within any given corridor -- and our heightened sensitivity to the
potential for sabotage to critical infrastructure -- points to the need
for redundancy. System mobility will improve when cargo owners and
vehicle operators have more options. That can only be provided through
effective government and private sector partnerships utilizing the
inherent advantages of all modes of transportation.

Indeed, a key purpose of these hearings is to enable the Committee to
tackle the key question posed by the Secretary's suggestion: How can
short sea shipping become "robust" enough to help reduce growing freight
congestion? I would add a companion question: How can marine
transportation be made integral to the surface transportation system on
which the Nation depends? More on that below. Clearly, there will be no
single, silver bullet short sea shipping solution. The SeaBridge "marine
highway" network will be an important contributor to the robustness of
short sea shipping services.

To be robust and sustainable, short sea shipping services must attract
traffic that now uses our highways. The challenge of handling the
growing volume of international cargo is important, but it pales in
comparison to the challenge presented by the movement of domestic
freight by highway. SeaBridge has invested its resources to develop
services designed to draw highway users to its coastal routes.

Over the past fifteen years, motor carriers and railways have created an
intermodal revolution on land. They have gradually moved past the
historic modal warfare of the previous seventy years to collaborate in
creating new freight capacity. However, even doubling rail intermodal
use will not begin to address the projected "gap" between demand and
capacity nor address highway truck movements that are not conducive to
rail movements.

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Yet, with limited exceptions such as the movement of bulk commodities
and empty containers, scant attention has been given to using our
coastal oceans to add capacity.

Let there be no doubt, as the burden of vehicles and freight tonnage
grows, the limits of road and rail capacity will be stressed even more.
Coastwise shipping will be successful only if it can provide trucking
and logistics companies and shippers with cost and time effective
alternate route infrastructure and options which will make it easier for
land modes to manage the projected growth in intermodal freight.

Modern coastwise shipping operations can provide long haul trucking
companies greater options in the management of driving personnel and
would allow truckers to meet hours of service requirements while
allowing freight to remain in motion. In that and other ways the
coastwise movement of freight will help trucking companies to further
rationalize their resources and contribute to safer travel on these
densely traveled corridors. As noted earlier, in contrast to rail
intermodal, trucking companies could opt to have their driver accompany
the load on board the vessel, rest, and resume driving when the vessel
arrives at its destination. Alternatively, like rail intermodal, the
trucking company can use the vessel exactly like it now uses the rail.

Efficient and price-competitive freight and passenger maritime
transportation services will foster greater development of modern
coastal shipping in the U.S. and thus enhance the national
transportation system in the long term. New marine highway networks can
move literally, and I do mean literally, billions of vehicle miles per
year from these congested coastal corridors by integrating domestic
intermodal shipping with land routes.

While SeaBridge believes it can provide a commercially viable,
corridor-wide option for the Nation to use its vast coastal maritime
assets to relieve road congestion by adding significant new capacity
that is sustainable, environmentally sound, and can keep pace with the
ever increasing mobility of people and goods along the Eastern and Gulf
Coasts, it is but one outlet. There need to be other short sea shipping
services, many others, to make a dent in the surface infrastructure
capacity challenge facing the nation.

Mr. Chairman, the Nation is facing an economic challenge of
unprecedented magnitude, no less daunting than faced our forebears in
the previous three centuries. We built the canal systems that served the
economy of the early Republic in the 18^th^ Century, the railways that
propelled the Nation's economic growth in the 19^th^ and into the 20^th^
Century, and the Interstate Highway System, airports and the air traffic
control system in the second half of the 20^th^ Century that helped spur
the creation of one of the most efficient modern economies known to man.

Each of these accomplishments required private initiative and public
support. All required substantial capital investment. The challenge we
face today is maintaining and adding capacity to these systems but just
as importantly, utilizing our existing surface transportation resources
-- highways, railways and waterways -- in ways that optimize their
collective ability to sustain our economy. This, too, will be no less a
financial challenge than our earlier successes were.

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Advocacy of policies aimed at promoting economic growth and
international trade, which inevitably appear as increased freight on our
domestic road and rails without at the same time supporting policies
which ensure commensurate growth in the capacity of the national surface
transportation system is short-sighted and unsustainable. It is the
equivalent of pursuing policies that encourage people to run while at
the same time supporting polices that tie their shoelaces together. Yet,
this is precisely the flawed path we have been following.

The cost of congestion across our surface transportation infrastructure
is a tax -- the nastiest kind of tax, hidden and regressive. Worst of
all, the impact of this "congestion tax" multiplies as goods move
through the supply chain, accumulating until we pay it in the price of
everything we buy. Starving our national transportation infrastructure
of investment is, indeed, as foolish a policy as can be imagined.

As befits the history of the development of the modes that now form our
national transportation system, we have defined our system in modal
terms - highways, railways and waterways -- each with its own unique set
of attributes e.g., ownership, operations, financing, institutions, etc.
This has produced a "stove-pipe" approach to infrastructure development
and financing, which in turn fostered the creation of institutional
approaches that make it very difficult to elevate our view of
transportation challenges to a regional or national level and beyond
individual modes. As a result, we have balkanized surface infrastructure
planning and financing that has limited the role that waterways can play
in our national surface freight and passenger transportation system. I,
for one, am heartened that this Committee is taking the lead in studying
the potential of this long overlooked resource.

As our population and commerce expanded, particularly during the last 25
years, the Federal government began to recognize that this "modal"
approach to transportation mobility was not an effective or sustainable
way to ensure either the growth or viability of our transportation
infrastructure. Passage of the Intermodal Surface Transportation Act
(ISTEA) in 1991 began the slow shift Federal transportation policy to
view transportation corridors as intermodal and multi-modal pathways
upon which flowed goods and people across jurisdictions and modes. That
said, we have far to go in implementing the spirit of that landmark law.

The Transportation Equity Act of the 21^st^ Century (TEA-21) continued
this policy direction as does its successor, SAFETEA-LU which provided
\$286 billion in the last six year highway reauthorization, an amount
that the Department of Transportation's own 2002 estimates indicate was
almost \$200 billion short of the amount needed just to maintain the
existing highway system for the period. This Subcommittee and the full
Committee must not shy away from the scale of the financial challenge,
nor the fact that in infrastructure terms, the day of reckoning is
closing in on us fast.

We know the problem, but must move from diagnosis to treatment, from
lamenting the problem to building support for enactment of a
comprehensive, modally blind, practical solution that can meet a vital
national interest -- the ability of an integrated national surface
transportation system to meet the needs of our economy in the 21^st^
Century. As a contribution to that process, I am submitting for the
record a paper I have prepared which offers as a starting point six
principles to guide creation of a comprehensive, unified approach to
address the competing demands of maintaining and upgrading the existing
system and adding new capacity.

Thank you for your time and attention. I look forward to working with
the Committee in any way in which I can be of assistance in its efforts
to develop policies that will enable the Nation to take full advantage
of its ample coastal and inland water resources to add much needed
capacity to our national transportation system.