Congress has shown great concern about the performance of the nation's freight network. In the 2015 surface transportation reauthorization, the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ), Congress stated a national policy of improving the condition and performance of a "National Multimodal Freight Network" to help the United States compete in the global economy while mitigating the adverse environmental impacts of freight movement. The law authorized funding to improve freight transportation infrastructure, directed the U.S. Department of Transportation (DOT) to identify freight choke points and critical commerce corridors, and required state departments of transportation to establish freight performance targets. The law also called upon DOT to establish performance metrics for U.S. seaports. DOT forecasts that domestic freight tonnage will increase by 40% over the next three decades, and that truck tonnage will increase by 44%. Some of the most congested truck routes, such as Interstate 95 in the East and Interstate 5 in the West, run parallel to coastal shipping routes, and water shipment through the Saint Lawrence Seaway and the Great Lakes has the potential to relieve pressure on major east-west highways, pipelines, and railroads in the Midwest. Coastal and Great Lakes shipping, therefore, may offer opportunities to facilitate commerce along these corridors. In recent years, however, domestic shipborne commerce has generally lost ground to truck and rail freight. This is despite long-standing policy intended to promote use of the U.S. merchant marine, particularly deep-draft oceangoing ships, with financial assistance provided to U.S. shipbuilders, ship owners, and ship crews. A 2007 law authorizing federal support for projects intended to divert truck and rail freight to parallel waterways has been unsuccessful in reversing this trend. One reason for the declining cargo volumes of domestic coastal and Great Lakes shipping is that aspects of federal maritime policy tend to raise the cost of transporting goods by ship relative to other modes. Also, port costs appear to be a particular barrier to diverting truck freight to a coastal waterway. This report examines recent trends in waterborne freight movement within the United States and offers policy options that might strengthen the competitive position of coastal and Great Lakes shipping in the face of robust demand for freight transportation. Under a different mix of federal policies, ships could be a least-cost method for moving goods. They do not need to acquire and maintain rights-of-way like railroads and pipelines. They can move much more cargo per trip and per gallon of fuel than trucks and railroads. Although ships are slower than other modes of freight transportation, many shippers are willing to sacrifice transit time for substantially lower costs, as long as delivery schedules are reliable. The willingness of some shippers to accept longer transit times in return for the cost advantages of waterborne shipping is evident in the movement of U.S. foreign trade. Importers in the eastern United States have a choice of unloading Asian goods at a Pacific Coast port and moving them across the country by railroad or shipping their goods through the Panama Canal directly to an East Coast port. The transcontinental rail crossing takes about a week, and is significantly more costly than the "all-water route" through the Panama Canal, which takes about two weeks. Generally, importers of higher-value goods choose the quicker but more expensive rail route, while importers of lower-value goods choose the all-water route. About a third of the containers shipped from Asia to the U.S. East Coast move via the all-water route through the Canal. Conversely, West Virginia coal, with low value per ton, is exported to Asia from the ports of Baltimore and Norfolk, where it is loaded on ships that sail through the Panama Canal. Moving it by rail to West Coast ports would be faster but more costly. With an extensive coastline, water access between the Atlantic Ocean and the Great Lakes, and the possibility of intercoastal transport between the Atlantic and Pacific coasts through the Panama Canal, U.S. geography is well suited to take advantage of ships' ability to facilitate commerce. The fact that a very large share of U.S. economic activity takes place along its coasts would seem to offer a considerable market for coastal shipping. However, the domestic ship fleet could be a constraining factor, in terms of the age of some of the ships and because some common ship designs are missing from the fleet. For instance, while the maximum economic life of a ship in the world market is typically 20 years, 75% of the domestic container ship fleet is beyond this age, and 65% is older than 30 years. Only two dry bulk ships are available in the oceangoing fleet, and they are approaching 40 years in age. The Great Lakes fleet consists mostly of dry bulk ships, and these ships are older than 40 years. No break-bulk or heavy-lift/project cargo ships exist in the fleet. These ships are useful for carrying such prevalent types of cargo as steel products and large pieces of equipment. The one chemical tanker in the fleet is nearly 50 years old. The oil tanker fleet is more modern because the Oil Pollution Act of 1990 ( P.L. 101-380 ) required that oil tank vessels have double hulls, necessitating more recent building activity. Altogether, there are only 128 deep-draft ships in the domestic fleet. The availability of these ships may also be a factor. Vessels transporting goods between two U.S. points must be U.S.-built. This requirement originates in the Merchant Marine Act of 1920 (P.L. 66-261, §27) and is part of the law commonly referred to as the Jones Act. No such restriction applies to equipment used in truck, rail, pipeline, or air transportation, or in international waterborne commerce. Despite their inherent efficiencies, domestic coastal and Great Lakes shipping carry barely half as much cargo today as they did in 1960 ( Figure 1 ), even though the U.S. economy is much larger today. Over the same period, railroads have increased their transport volume by about 50%, and intercity trucks, oil pipelines, river barges, and coastal ships linking the United States with Canada and Mexico all have more than doubled their freight tonnage. While ships remain an attractive transport method for importers and exporters, they apparently are not attractive to shippers in domestic commerce. The fact that vessels can move low-value goods more economically than railroads could be important for domestic trade between the interior Midwest and the coasts. The Mississippi River System (including the Ohio River and Illinois Waterway) and the Great Lakes and St. Lawrence Seaway, combined with coastal shipping, offer potential "all-water routes" to move cargo between the interior and both the Atlantic and Pacific Coasts. However, the relatively high cost and limited availability of domestic coastal shipping may lead to use of international trade in place of domestic trade. As one example, hog and poultry farmers in the Carolinas often import feed from South America partly because the shipping cost is less than the cost of bringing feed by rail from the Midwest; an all-water route might make feed from the Midwest more price-competitive. An all-water route could also reduce the chance of a spill when transporting hazardous cargoes between the two regions because a smaller number of trips would transport the same amount of cargo. Figure 2 illustrates that the substantial reduction in both domestic coastwise and Great Lakes shipping volumes has occurred over several decades. This indicates that the decline is due not to a short-term business cycle but to more enduring economic factors. The commodity mix of domestic coastwise and Great Lakes cargo is much less diverse than it once was, as higher-value cargo has largely shifted to truck and rail modes. (Note that the "coastwise" data in Figure 2 include domestic shipping to and from Alaska, Hawaii, and Puerto Rico, unlike in Figure 1 .) Concern about the decline of coastwise and Great Lakes shipping is of long standing. For example, in 1960, U.S. domestic ocean carriers urged Congress to approve a bill requiring the Interstate Commerce Commission to raise rail rates on parallel routes to improve the maritime industry's competitive position. No such legislation was enacted. Coastwise shipping of refined petroleum products today is a third of the volume shipped in 1960. In the early 1960s, strikes by crews on coastal tankers were a factor in decisions to build the Colonial Pipeline from Houston to New York and the Olympic Pipeline from Puget Sound refineries to Portland, OR. Today, these two coastal pipelines, along with a third, the Plantation Pipeline running from Baton Rouge, LA, to Washington, DC, transport the equivalent of 4,000 tanker loads of refined products per year. As Figure 2 indicates, coastwise shipping temporarily surged in the late 1970s as the opening of the Alaska pipeline brought about coastwise shipments of North Slope crude oil from the Port of Valdez. The Alaska oil shipments, which went mainly to refineries near Seattle, San Francisco, and Los Angeles, held steady for about a decade but then began declining. According to one analyst, the decline has been due partly to high transportation costs, which reduce the profitability of Alaska production. More recently, the volume of coastwise and inland waterway freight has been rising due to the boom in crude oil production in Texas and North Dakota. However, coastwise movement of this oil and the products refined from it is overwhelmingly performed by barge; very little oil in domestic trade moves by tanker ship. The use of coastal shipping is decreasing even between origin and destination pairs close to the coastline. For example, freight moving from New England and eastern New York to the southeastern coastal states of South Carolina, Georgia, and Florida overwhelmingly moves by overland modes ( Figure 3 ).